In the face of very challenging macroeconomic events characterised by rising inflation, energy prices, interest rates, and weakened consumer purchasing power, Nigerian consumer goods firms generated a whopping sum of N1.61 trillion from the sale of their products in the nine-month period of 2022, 30.06 percent up from N1.24 trillion earned in the nine-month period of 2021.
BusinessDay analysed the nine-month financial results of top eight (8) leading companies in the fast-moving consumer goods (FMCG) sector including; Nigerian Breweries Plc, Nestle Nigeria Plc, BUA Foods Plc, Dangote Sugar Refinery, International Breweries, Unilever Nigeria Plc, Cadbury Nigeria Plc, and Nascon Allied Industries Plc.
The growth in revenue reported by these companies was driven by higher product prices and demand from consumers during the period under review. On a nine-month basis, GDP for the food and beverage sector is up by 3.5 percent in line with the revenue growth reported by these companies.
Consequently, profit reported by these companies grew by 41.16 percent to N151.04 billion in the nine-month period of 2022 from N107 billion in the corresponding period of 2021.
Company Analysis
Nigerian Breweries Plc
Nigerian Breweries beat its peers to post the highest revenue in the nine-month period of 2022 amounting to N393.45 billion, 27.21 percent up from N309.28 billion in the corresponding period of 2021.
While the company noted that the growth was partly due to its winning pricing strategy and a strong performance in the first half of the year, analysts at CSL Stockbrokers Limited stated that “while we note that sales are usually at their peak in the fourth quarter (Q4) due to increased consumption during the yuletide season, we believe that the steady quarterly declines in revenue may be related to the shrinking consumer disposable income as consumers adjust their expenditure pattern in favour of most basic needs.”
Nigerian Breweries also noted that “the last three months saw the return of market seasonality characterised by lower volume performance. The market decreased by a high single digit reflecting pressure on consumer disposable income as well as heavy rains and food. Nevertheless, we performed relatively well in the period led by our strong premium portfolio of Heineken®, Tiger, and Desperados.”
Profit reported by the company grew by 79.56 percent to N14.76 billion in the nine months period ended September 2022 from N8.22 billion in the nine months period ended September 2021.
Consequently, the beer maker’s profit margin stood at 3.75 percent in the nine-month period of 2022.
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Nestle Nigeria Plc
Nestle Nigeria’s revenue grew by 27.48 percent to N333.47 billion in the nine-month period of 2022 from N261.59 billion in the nine-month period of 2021, making it the second highest revenue reported amongst its peers.
A further look into the finance results shows that Nestle generated N330.59 billion from the sale of its goods in Nigeria and N2.89 billion from export sales.
Consequently, profit grew by 19.57 percent to N40.15 billion in the nine-month period from N33.58 billion in the corresponding period of 2022, thereby bringing profit margin for the period to 12.04 percent.
BUA Foods Plc
BUA Foods demonstrated its tenacity by reporting a 20 percent growth in revenue despite a decrease in volumes sold.
Data gathered from the nine-month (9M) financial results available on the Nigerian Exchange Group showed that its revenue grew to N289.8 billion in September 2022, up from N241.1 billion in September 2021.
According to the company, the growth in revenue despite volumes sold was driven by product price adjustments.
Further analysis of the 9M’2022 financial results shows the sugar division contributed 62.4 percent to the total revenue generated in the period. Its sugar division generated N180.9 billion in 9M’2022, a 17 percent increase from N154.7 billion in 9M’2021.
Volume sold in the sugar division declined by 8.2 percent to 418,329 tons within the period from 453,773 tons in the same period last year.
The firm stated that “the decline in production is attributable to energy disruptions within the period, and Non Fortified sugar and molasses delivered good growth from elevated demand in the period.”
BUA Foods’ profit grew by 17 percent to N68.76 billion in the nine-month period that ended in September 2022 from N58.69 billion in the corresponding period of 2021.
Its profit margin, however, shrunk by 61 basis points to 23.7 percent in 9M’2022 from 24.3 percent in 9M’2021 on the back of rising input costs.
Dangote Sugar Refinery
Revenue reported by Dangote Sugar Refinery grew by 47 percent to N288.32 billion in the nine-month period of 2022 from N195 billion in the corresponding period of 2021, the highest reported in ten (10) years.
Ravindra Singhvi, group managing director of Dangote Sugar Refinery Plc in his remarks attributed the positive results in the nine months to critical trade interventions introduced during the year and positive market responses.
He said, “Our impressive performance in the period demonstrates our resilience in the face of prevalent challenges, which is rightly reflected in strong topline growth shown in the financial results.”
The sugar maker reported a 60 percent surge in profit in the first nine months of 2022 to N24.8 billion from N15.5 billion in the nine-month period of 2022.
Consequently, the profit margin was up 68 basis points to 8.61 percent in the nine-month period of 2022 from 7.93 percent in the nine-month period of 2021.
International Breweries Plc
International Breweries reported its highest revenue in ten (10) years amounting to N160.4 billion in the nine-month period of 2022, and up 13.91 percent from N128.4 billion in the nine-month period of 2021.
The firm’s managing director, Hugo Dias Rocha stated that “despite the difficult quarter, we remain focused on our winning commercial strategy. Year-to-date, our brands remain resilient and continue to deliver net revenue growth.”
“Top-line grew by mid-single digits (5.6 percent) driven by revenue management initiatives. Gross profit and margins declined on elevated costs largely due to higher energy prices, FX illiquidity, commodity cost headwinds, severe weather, and overall inflationary pressures. We remain EBITDA positive on the back of prudent resource allocation and cost management,” he added.
Despite this, it reported its lowest loss in five (5) years in the first nine months (9M) of 2022, as loss decreased by 79.93 percent to N 2.8 billion from N14 billion in the first nine months of 2021, bringing a loss margin of 1.75 percent.
Unilever Nigeria Plc
Based on its nine month 2022 unaudited numbers, Unilever’s revenue grew by 30.4 percent to N64.77 billion from N49.67 billion in the nine-month period of 2021.
The Food segment – Blue Band, Knorr and Royco, recorded impressive growth, up 43.2 percent y/y to N30.66 billion in 9M 2022 from N21.42bn in 9M 2021. “We note that the discontinued tea business generated N9.05 billion in 9M 2021, which if adjusted, implies an effective food revenue growth of 148 percent in 9M 2022,” CSL Stockbrokers analysts stated.
The home and personal care products segment grew 20.7 percent to N34.12 billion in 9M 2022 from N28.26 billion in 9M 2021.
The company, however, reported a loss of N348 million in the nine month period of 2022, bringing loss margin for the period to 0.54 percent.
Cadbury Nigeria Plc
Cadbury Nigeria Plc’s nine months 2022 numbers showed a 41.6 percent y/y growth in revenue to N42.54 billion from N30.05 billion in the corresponding period of the prior year.
This was largely driven by the beverages (Bournvita and 3-in-1 Hot Chocolate drink) business segment, which contributed 72 percent of the revenue and grew by 52 percent to N30.23 billion in 9M 2022 from N19.88 billion in 9M 2021.
Sales of TomTom, Butter mint, and other confectioneries grew 26 percent to N11.32 billion in 9M 2022 from N8.98 billion in 9M 2021. However, revenue from intermediate cocoa products continued to shrink, down by 16 percent to N998 million in 9M 2022 from N1.19 billion in 9M 2021 . “We believe that the recent increase in prices has continued to support revenue growth,” CSL Stockbrokers Limited.
Its profit grew by 86.75 percent to N2.82 billion in the nine-month period of 2022 from N1.51 billion in the corresponding period of 2021, bringing profit margin for the period to 6.63 percent.
Nascon Allied Industries
Nascon’s revenue grew by 62.77 percent to N40.61 billion in the nine month period of 2022 from N24.95 billion in the nine-month period of 2021.
Consequently, profit grew by 19.01 percent to N2.88 billion in the nine-month period of 2022 from N2.42 billion in the same period of last year, bringing profit margin for the current year to 7.09 percent.
