Nestlé Nigeria Plc (NESTLE) appears to have stepped up investment commitments, with CAPEX intensity rising to 9.3% in Q1'25 (vs 7.6% in FY'24 and a mean of 7.4% in the last 5 years). The associated investments (principally N27.1 billion in capital work-in-progress) are primarily linked to capacity expansion and underscore growing confidence in the Nigerian market, where consumer demand is expected to continue to recover from policy-induced pressures. The commitments are also in line with the 60.7% YoY expansion in revenue and better-than-expected EBIT margin in Q1'25. In view of the recovering macroeconomic conditions, investment commitments, and current run rates, we adjust our EBIT margins for FY'25 and the average over our forecast horizon higher to 23.8% and 24.2%, respectively (vs 19.0% and 19.4% previously forecasted).
