Cadbury and Nestlé Lead 2025 Consumer Goods Rally on Nigerian Exchange

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Cadbury Nigeria Plc and Nestlé Nigeria Plc, two major players in the food production-diversified sub-sector of the Nigerian Exchange, have emerged among the best-performing stocks of 2025, delivering exceptional year-to-date gains and renewed investor optimism.

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Cadbury Outpaces with 193% YtD Gain

Cadbury has led the sector rally, posting a 193% year-to-date (YtD) rise, while Nestlé has delivered a 114% gain as of September 2025.

The performance marks a sharp reversal from 2024, when Cadbury delivered only a 26% return and Nestlé fell 20% into negative territory. Both stocks are now trading close to their 52-week highs — Cadbury at 89%, Nestlé at 99%.

Despite its stronger growth and profitability margins, Cadbury faces investor concerns over negative earnings per share (EPS) and weak operating cash flow. Nestlé, by contrast, trades at higher valuation multiples but offers consistent profitability and robust cash generation.

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Sector Performance Boosts Momentum

The rally in consumer goods stocks reflects broader sector gains. The Consumer Goods Index has surged 96% YtD, far outpacing the All-Share Index’s 38.33% growth and the 39.5% sector return in 2024.

As of September 2025, listed consumer goods companies had a combined market capitalization of N19.86 trillion, representing about 22% of the Nigerian Exchange’s N90.59 trillion total market cap.

Nestlé dominates in market value with a capitalization of N1.48 trillion, while Cadbury stands at N144 billion. Together, both account for N1.63 trillion, up from N743 billion in December 2024.

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Strong Turnaround in H1 2025

Both companies staged a remarkable recovery in the first half of 2025 after reporting heavy losses the previous year.

• Cadbury swung from a N9.72 billion loss in H1 2024 to a N10.18 billion profit in H1 2025.

• Nestlé reversed a staggering N177 billion loss to a N50.57 billion profit in the same period.

Cadbury recorded a stronger profit margin of 13%, compared to Nestlé’s 9%, underscoring its efficiency relative to size. Still, Nestlé remained dominant in absolute profit and revenue scale.

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Foreign Exchange Gains Drive Recovery

A key driver of the rebound was a shift from foreign exchange losses to gains:

• Cadbury moved from a N16 billion forex loss in H1 2024 to a N249 million gain in H1 2025.

• Nestlé recovered from a N264 billion forex loss to a N3 billion gain in the same period.

Operationally, Nestlé outperformed in absolute numbers, while Cadbury demonstrated sharper growth momentum.

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Balance Sheet Position

Nestlé controls 91% of the combined N946 billion asset base of both firms but continues to carry larger retained losses.

• Nestlé: Retained losses stood at N193 billion in H1 2025, with negative shareholders’ funds of N41.7 billion, though this marks an improvement from -N92.3 billion in 2024. Sustained profitability could push Nestlé out of negative equity in H2.

• Cadbury: Retained losses fell to N27 billion, allowing shareholders’ funds to rise to N14.55 billion. If H1 performance continues, Cadbury could eliminate retained losses by year-end.

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Valuation and Outlook

Efficiency ratios favour Cadbury, which posted an interest coverage ratio of 7.63x versus Nestlé’s 2.82x, and an asset turnover of 0.88 compared to Nestlé’s 0.65.

However, Nestlé’s cash generation provides stronger backing for earnings quality:

• Cadbury reported negative operating cash flow of -N1.3 billion in H1 2025.

• Nestlé generated a robust N187 billion in operating cash flow.

Valuation metrics also reflect investor preferences:

• Cadbury: Price-to-book ratio at 9.87x and P/S ratio at 0.93x. EPS remains negative (-1.05).

• Nestlé: P/E ratio at 23.6x and P/S ratio at 1.32x, supported by trailing EPS of N79.34.

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Investor Takeaway

Analysts note that while Cadbury offers higher growth momentum, its weak cash flows raise sustainability concerns. Nestlé remains the more stable long-term play, with cash-backed earnings and stronger fundamentals despite higher leverage.

The final quarter of 2025 will be critical in determining whether both companies can sustain their momentum and consolidate gains for shareholders.