Overview of Finance Costs in Nigerian FMCG Sector
The finance costs of 12 leading fast-moving consumer goods (FMCG) companies listed on the Nigerian Exchange experienced a significant decline in the first quarter of 2026. The combined finance costs dropped by 23.02 per cent, reaching N67.66bn from N87.90bn in the same period of 2025. This reduction indicates improved profitability, lower debt burdens, and a greater reliance on equity financing.
An analysis of the companies’ unaudited financial statements revealed that the decrease in finance costs amounted to N20.23bn year-on-year. Many firms returned to profitability and accelerated debt repayment after navigating the challenges posed by foreign exchange volatility and high borrowing costs in 2025.
Finance costs refer to the total expenses a company incurs for borrowing money or financing its operations. These costs are reported in the income statement and directly impact a company’s profit. Industry analysts attributed the improvement in finance costs to stronger earnings, deleveraging, and increased access to equity financing following a rally in the Nigerian capital market, which reduced dependence on expensive bank borrowings.
Key Players in the Decline
Dangote Sugar Refinery was the largest contributor to the decline in finance costs, although it still recorded the highest finance cost in the sector at N28.45bn, a decrease of 4.73 per cent from N29.86bn. Nestlé Nigeria followed with a 27.88 per cent reduction in finance costs to N16.92bn from N23.47bn, while Nigerian Breweries saw one of the sharpest reductions, cutting finance costs by 46.09 per cent to N8.28bn from N15.36bn.
Other notable declines included:
- Guinness Nigeria: Finance costs plunged 81.42 per cent to N1.43bn from N7.72bn.
- BUA Foods: Finance costs decreased by 72.30 per cent to N1.04bn from N3.77bn.
- Cadbury Nigeria: Finance costs were reduced by 67.81 per cent to N392.7m from N1.22bn.
- NASCON Allied Industries: Finance costs declined by 59.27 per cent to N86.5m from N212.4m.
Despite these positive trends, some companies experienced increases in finance costs. Champion Breweries saw a surge of 936.37 per cent to N3.05bn from N293.93m; International Breweries posted an 82.80 per cent increase to N3.58bn from N1.96bn; and Northern Nigeria Flour Mills recorded a 2,110.18 per cent jump to N306.16m from N13.85m. PZ Cussons Nigeria also reported an 84.61 per cent increase to N217.1m from N117.6m. Honeywell Flour Mills maintained unchanged finance costs at N3.90bn.
Significant Improvements and Challenges
Guinness Nigeria recorded the strongest recovery, slashing finance costs by 81.42 per cent, or N6.28bn. BUA Foods followed with a 72.30 per cent reduction amounting to N2.72bn, while Cadbury Nigeria reduced finance costs by 67.81 per cent, or N827.3m.
NASCON Allied Industries posted a 59.27 per cent decline equivalent to N125.9m, while Nigerian Breweries cut finance costs by 46.09 per cent, or N7.08bn. Cadbury also reported a large unrealised foreign exchange gain that pushed its reported finance line into a net income position, although its underlying finance cost still declined sharply. Nigerian Breweries similarly benefited from the near-elimination of foreign exchange losses, while Nestlé’s finance income surged significantly, reducing its net finance burden.
Despite the overall improvement, Dangote Sugar recorded only a 4.73 per cent reduction in finance costs, leaving it with the sector’s largest financing burden. Honeywell Flour Mills recorded no improvement as finance costs remained flat at N3.90bn.
Among firms whose costs worsened, PZ Cussons Nigeria reported an 84.61 per cent increase, or N99.5m; International Breweries posted an 82.80 per cent rise amounting to N1.62bn, while Champion Breweries and Northern Nigeria Flour Mills recorded the steepest increases.
Leading Companies by Finance Costs
Dangote Sugar remained the largest spender on finance costs at N28.45bn, followed by Nestlé Nigeria at N16.92bn, Nigerian Breweries at N8.28bn, Honeywell Flour Mills at N3.90bn, and International Breweries at N3.58bn. Champion Breweries spent N3.05bn, Guinness Nigeria N1.43bn, BUA Foods N1.04bn, Cadbury Nigeria N392.7m, Northern Nigeria Flour Mills N306.16m, PZ Cussons Nigeria N217.1m, and NASCON Allied Industries N86.5m.
Based on finance cost moderation and net finance performance, NASCON Allied Industries ranked the strongest after recording finance costs of just N86.5m alongside net finance income of N2.44bn. Honeywell Flour Mills maintained a positive net finance income position while keeping annual finance costs unchanged. Nestlé Nigeria dramatically reduced its net finance cost after finance income surged to N15.26bn, while Nigerian Breweries benefited from the sharp decline in foreign exchange losses.
Although Cadbury Nigeria reported net finance income due to unrealised foreign exchange gains, its underlying finance cost also improved substantially.
Expert Perspectives
In a phone interview, Dr Ayo Teriba, Chief Executive Officer of Economic Associates, noted that the decline in finance costs reflected a shift in corporate financing from debt to equity as the Nigerian stock market strengthened. He explained that this trend indicated that companies relied more on equity financing in 2026 compared to 2025, when they depended more on debt.
Kayode Eseyin, an Investment Associate at CardinalStone, attributed the moderation in finance costs to improved earnings and aggressive debt repayment. He highlighted that most FMCG companies returned to profitability in 2025 and were actively reducing their debt, which naturally led to a decline in finance costs.
Mobifoluwa Adesina, a research analyst, assessed that the easing in finance costs was driven by two factors: sector-wide deleveraging and a more stable interest rate environment. He pointed out that many FMCG companies had aggressively repaired their balance sheets through debt reduction, refinancing, and equity raises, resulting in lower debt burdens by 2025.
