Foreign-owned fast-moving consumer goods (FMCGs) companies in Nigeria are facing growing financial pressure as rising finance costs, heavy dollar debt, and dependence on parent company funding continue to weigh on their operations and shareholder value, a review of their 2025 audited accounts shows.
While some companies recorded a return to profitability, the underlying numbers reveal a deeper strain driven by foreign exchange exposure, high interest payments, and aggressive debt management strategies.
Finance Costs Burden
Finance costs remain a major burden across most of the companies, though the scale varies widely.
Nestlé Nigeria Plc recorded the highest finance cost at ₦100.96 billion in 2025, largely driven by ₦81.9 billion in interest on loans from its parent company.
Although this was lower than the ₦392.8 billion recorded in 2024 due to exchange gains, the cost remains significant.
Guinness Nigeria Plc reported ₦26.26 billion in finance expenses, mainly from interest payments, while International Breweries Plc posted ₦12.18 billion, now mostly tied to lease liabilities rather than traditional loans.
Cadbury Nigeria Plc saw a sharp drop in finance costs to ₦2.65 billion from ₦34.72 billion in 2024, helped by exchange gains that offset borrowing costs.
In contrast, Unilever Nigeria Plc maintained minimal finance costs of just ₦0.82 billion, reflecting its conservative borrowing approach.
Despite these improvements, past finance costs have already caused serious damage.
Several companies recorded heavy losses in 2024, wiping out earnings and preventing dividend payments even after returning to profit in 2025.
Increasing Dollar Debt
Dollar-denominated debt remains a key risk, especially in an environment of currency volatility.
Nestlé Nigeria carries the largest exposure, with $328.22 million (₦471.2 billion) in loans from its parent company.
Although this is lower than the previous year, it still far exceeds the levels seen across its peers.
Cadbury Nigeria also maintains a $15 million loan from its parent company, despite converting $7.72 million of debt into equity in 2024 to reduce exposure.
By contrast, Guinness Nigeria has eliminated its dollar debt after fully repaying its $22.5 million parent-company loan, while International Breweries has no outstanding dollar debt following its capital restructuring. Unilever Nigeria’s exposure remains minimal.
The trend shows a clear divide between companies still exposed to foreign currency risk and those that have moved to reduce it.
Borrowing to Service Existing Debt
Some companies appear to be relying on continuous borrowing to manage existing obligations.
Guinness Nigeria recorded ₦219.6 billion in new loans while repaying ₦218.5 billion, alongside ₦24.3 billion in interest payments, suggesting heavy debt rotation to sustain operations.
Nestlé Nigeria shows a similar pattern, raising ₦133.8 billion in loans and repaying ₦128.9 billion, while paying ₦178.4 billion in interest during the year.
This indicates ongoing borrowing to service large existing debt, particularly from its parent company.
In contrast, Cadbury Nigeria reduced its debt through equity conversion rather than new borrowing, while International Breweries cleared its loans through a rights issue and now carries no debt.
Unilever Nigeria, with strong cash reserves, does not rely on borrowing to meet obligations.
Reliance on Parent Funding
Dependence on parent companies remains a defining feature for some firms.
Nestlé Nigeria stands out as the most reliant, with ₦471.2 billion in loans from its Swiss parent and continued operational support, including guarantees that allow it to function despite weak working capital.
Cadbury Nigeria also depends on its parent company for funding, with its $15 million loan forming a key part of its borrowing structure and the parent holding a controlling equity stake.
On the other hand, Guinness Nigeria has shifted away from parent funding and now depends mainly on local bank loans, while International Breweries has eliminated such reliance after restructuring.
Unilever Nigeria remains largely self-funded, with minimal debt and strong cash reserves, allowing it to maintain dividend payments.
The 2025 financial results show that while some foreign-owned FMCGs are stabilising after a difficult 2024, many are still under pressure from high finance costs, dollar debt exposure, and funding structures that continue to weigh on long-term shareholder value.
Profits Grew, But Debts Tell a Different Story
Major foreign-owned consumer goods companies in Nigeria reported a strong rebound in profits in 2025, recovering from heavy losses recorded a year earlier.
But behind the improved performance, their debt positions reveal a more complicated picture of financial health and risks.
Nestlé Nigeria remained the biggest player, with revenue rising to ₦1.21 trillion and profit after tax hitting ₦105 billion after a huge loss in 2024.
However, the company is still weighed down by ₦112.8 billion in accumulated losses and a massive debt burden of about ₦476 billion, mostly owed to its parent company abroad. This has made it impossible to pay dividends despite the return to profit.
Guinness Nigeria also bounced back strongly, posting a profit of ₦41.2 billion after a previous loss. The company reduced its reliance on its parent by clearing earlier debts, but it still carries ₦43.9 billion in loans from local banks. Even with the recovery, it chose not to pay dividends to stabilise its finances.
International Breweries recorded one of the biggest turnarounds, moving from a deep loss in 2024 to a profit of ₦50.9 billion in 2025.
It also cleared all its borrowings after a major capital raise, leaving it with no debt. However, past losses of ₦191 billion continue to weigh on the company, meaning shareholders will not receive dividends yet.
Unilever Nigeria stood out as the most stable among its peers. Its profit more than doubled to ₦32.2 billion, supported by strong revenue growth.
With very low debt of just ₦2.17 billion and a strong cash position, the company can reward shareholders with a dividend.
Cadbury Nigeria also returned to profit, posting ₦8.97 billion after a loss the previous year. Its debt was reduced to ₦22.8 billion, including a $15 million loan from its parent company.
Despite the improvement, it did not declare a dividend as it focuses on strengthening its business.
While these companies have returned to profitability, their debt levels and financial strategies show that the recovery is uneven.
Some are still heavily dependent on foreign loans, while others are cutting debt or relying on fresh capital.
The result is a mixed outlook where profit growth tells one story, but debt continues to shape the real financial position.
Risk for Shareholders, Survival Tool for Subsidiaries
The National President of New Dimension Shareholders, Patrick Ajudua, expressed concerns that rising finance costs driven by foreign exchange losses and interest on dollar-denominated parent company loans are eroding profitability and reducing shareholders’ funds, especially when the naira weakens.
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“Increase in Finance cost as a result of foreign exchange losses and interest on parent company loan can have a serious effect on profitability and consequently lead to a reduction in shareholders’ fund.
“This is mostly witnessed where foreign loan repayment is denominated in dollars and therefore subjected to exchange differences. In case the local currency isn’t strong against the foreign currency, then the company will witness exchange losses, which will reduce profitability,” Ajudua said.
He maintained that while this strategy exposes minority shareholders to risks they cannot control, companies often see it as unavoidable due to their heavy reliance on imported raw materials.
“The minority shareholders have no say in the choice of the company to rely on foreign/related party debt because the company is import dependent on its raw materials, as some of them can’t be sourced locally. Yes, this decision is not favourable to minority shareholders but becomes inevitable,” Ajudua added.
The Head of Financial Institutions Rating at Agusto & Co, Ayokunle Olubunmi, explained that the rise in foreign currency debt should be viewed in context, noting that most of it came during the FX crisis when subsidiaries could not access dollars.
“The first question is, how did these debts come about? The bulk of them came when parent companies had to support their subsidiaries during the FX crisis,” Olubunmi said.
He explained that the support helped companies stay operational and even gave them an edge.
He stressed that these loans are often cheaper than market funding and less risky for subsidiaries.
“What they are paying to the parent is lower than what they would pay in the market,” he said, noting that “if there is any real risk, it is more from the parent’s side,” Olubunmi pointed out.
He added that while debt-to-equity conversion could dilute shareholders. “When you weigh everything, the advantages outweigh the disadvantages.”
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X