Total borrowings for eight FMCG companies quoted on the Nigerian Exchange (NGX) in 2025 declined by 28% to N1.20 trillion, from the N1.66 trillion recorded in 2024, suggesting a deliberate effort by the firms to reduce their debt exposure.
This is according to Nairametrics analysis of the 2025 audited financial statements of major fast-moving consumer goods (FMCG) companies led by Nestlé Nigeria Plc, with the largest borrowing as well as debt repayment. The debt reduction comes amid sustained cost pressures and a high-interest-rate environment.
While most firms like Nestle Nigeria Plc, Nigerian Breweries Plc, Guinness Nigeria Plc, Unilever Nigeria Plc, Vita Foam reduced their liabilities, a few outliers, such as PZ Cussons, recorded an increase in debt.
What the data is saying
Nestlé Nigeria Plc, Nigerian Breweries Plc, Guinness Nigeria Plc, Unilever Nigeria Plc, Honeywell Flour Mills, and Vitafoam and other FMCGs recorded substantial reductions in their debt profiles, reflecting deliberate financial restructuring efforts.
- Nestle dominated the borrowing landscape with interest-bearing loans totaling N653.70 billion as at January 2025, an increase of N251.38 billion over N402.31 billion in 2024. The bulk of it is an intercompany loan.
- After substantial repayments, Nestle’s loans dropped to N476.04 billion as of December 31, 2025, significantly lower than N653.70 billion in the corresponding period of 2024.
- Nigerian Breweries Plc cut its debt sharply from N209.05 billion in 2024 to N59.71 billion in 2025, marking one of the most aggressive balance sheet adjustments in the sector.
- Guinness Nigeria Plc reported outstanding N36.83 billion in loans as of December 31, 2025, down from N40.13 billion in 2024, after loans repayments of N218.48 billion during the year.
- Unilever Nigeria Plc, Honeywell Flour Mills, and Vitafoam Nigeria also trimmed their borrowings to N2.2 billion, N26.97 billion, and N7.04 billion, respectively, while PZ Cussons increased its debt to N71.26 billion from N64.33 billion in 2024.
Overall, the financial data show a broad-based effort among FMCG firms to cut down on debt despite macroeconomic headwinds, signaling a strategic effort by companies to strengthen their balance sheets and reduce financial risks.
More insights
The reduction in debt exposure across FMCG companies has translated into a notable decline in interest expenses, easing pressure on profitability. This trend underscores the financial benefits of deleveraging, particularly in a high-interest-rate environment.
- Nestle Nigeria’s interest expenses moderated at N90.58 billion in 2025, down from N101.76 billion in 2024, while total finance costs dropped significantly from N392.83 billion to N100.96 billion.
- Unilever booked N134.763 million in interest expense in 2025, lower than N200.587 million in 2024.
- Guinness Nigeria Plc saw its net finance costs decline by about 79%, from N99.1 billion in 2024 to N20.87 billion in 2025.
- Nigerian Breweries Plc reduced its interest costs from N98.01 billion in 2024 to N44.99 billion in 2025, reflecting the impact of its aggressive debt reduction.
- Honeywell Flour Mills and Vitafoam Nigeria also recorded declines in interest expenses, while Northern Nigeria Flour Mills eliminated its debt entirely, reducing interest expense to N14 million.
These improvements highlight how lowering debt levels has helped companies preserve earnings and improve overall financial stability.
Expert views
Financial experts attribute the deleveraging trend to lessons learned during the financial strain experienced between 2023 and 2024. They note that companies are now prioritizing sustainability and efficiency in their capital structures.
- “This trend reflects a conscious effort to operate more efficiently and sustainably. Companies experienced significant financial pressure in 2023 and 2024, particularly due to foreign exchange volatility and high borrowing costs,” said Mr. Charles Fakrogha, Managing Director and Chief Executive Officer of ECL Assets Management Limited.
- “Finance managers are now focused on reducing interest expenses and strengthening balance sheets. Lower leverage means that profits are less eroded by financing costs, ultimately improving returns to investors,” he added.
- “Reducing debt improves the overall health of companies. When interest obligations decline, the ‘drain’ on earnings is removed, allowing companies to retain more value internally,” said Mr. Aruna Kebira, Chief Executive of Globalview Capital Limited.
- “With lower leverage, companies gain greater financial stability and control over how profits are allocated—whether through dividends, reinvestment, or expansion,” he concluded.
Experts also emphasized the importance of diversifying funding sources, including capital market instruments, to reduce reliance on expensive bank loans.
What you should know
Nigeria’s corporate debt crisis between 2023 and 2024 was largely triggered by foreign exchange reforms introduced by the Central Bank of Nigeria, which led to a sharp devaluation of the naira. Companies with significant foreign currency obligations saw their debt burdens increase dramatically as the weaker naira inflated liabilities.
- Several quoted firms recorded massive foreign exchange losses and rising finance costs during the period.
- Borrowings, particularly dollar-denominated loans, became significantly more expensive to service due to currency depreciation and higher interest rates.
- Some companies slipped into losses despite strong operating performance, as finance costs eroded earnings.
- The challenging environment forced firms, especially in the FMCG sector, to rethink their capital structures and reduce exposure to foreign debt.
This experience has driven the current wave of deleveraging in 2025, as companies prioritize balance sheet strength, reduce reliance on costly borrowings, and position themselves for more sustainable growth.
