Nestlé Nigeria has reported a 51.5% revenue growth to N121,920 million. A better economic environment, especially in relation to the exchange rate, supported stronger margins for the company.

Nestlé Nigeria announced a revenue of N121,920 million ($387 million) in its first half-year results of 2017. The company managed to increase revenue in the recession-stricken country by 51.5% from N80,443 million ($245 million), same time last year. Although revenue rose, operating costs did so as well, by 22%. These were not enough, however, to prevent an increase of the company’s operating profit. On the contrary, operating profit stood at $84 million, a 78% increase from last year’s result.

The numbers were especially driven by a more favourable trading environment, specifically in what concerns foreign exchange liquidity and price increases, which supported greater margins for the company. In fact, these were the factors behind last year’s poor profit-after-tax result and thus account for this year’s 3000% increase in this metric that has got most analysts talking.

Although the trading context has been favorable, Nestlé has made decisions – mainly related to product reformulation in terms of packaging and size – which, it says, have supported a strong growth in sales for Nestlé Nigeria. Additionally, the company asserted, on this point, that the growth in sales amidst rising inflation and challenging conditions for the consumer served as testament to its brand power and product loyalty. Among these products, which include Milo and Nescafe, it is worth to note that the food segment was, like last year, the better performing segment with a revenue increase of 61% (compared to a 37% growth in beverages).

Nestlé has been rethinking some of its core strategies for Africa and has recently decided to target lower-class consumers, following a seemingly overestimation of the continent’s middle class. At the time, Trendtype considered this a good strategy noting that “although the middle class will grow, it’s worth remembering that the vast majority of consumers in Nigeria and elsewhere in Sub Saharan Africa will remain on modest incomes.”