NB, HBM, Nestlé Nigeria, others book N129.4 billion in fees and royalties paid to parent

Seven foreign-owned companies on the Nigerian Exchange that disclose the figures booked N129.4 billion in royalties, licence, technical and management fees to their parent groups in the nine months through September.

That is up 7.7% from N120.1 billion a year earlier, according to their unaudited third-quarter filings.

At three of them — HBM Nigeria, International Breweries and Nigerian Breweries — the fees grew faster than revenue, roughly ten times as fast in International Breweries’ case.

At Nestlé Nigeria, the fees plus interest on a loan from its Swiss parent exceeded the profit left for all shareholders.

The payments are legal and approved by Nigeria’s technology-transfer regulator, NOTAP, which typically caps such fees as a share of net sales. But they land as the subsidiaries emerge from two years of currency losses that wiped out shareholders’ equity at four of them and forced parents to inject fresh capital or forgive loans.

Nestlé Nigeria, 70.81% owned by Switzerland’s Société des Produits Nestlé SA, charged N34.8 billion in general licence fees in the nine months, up from N32.3 billion. It booked another N16.5 billion in shared-service costs from Nestlé Central and West Africa. Together, that is N51.2 billion, or about 5.2% of revenue — the highest ratio in the group.

Shareholders’ equity climbed to N116.3 billion from N12.9 billion in December. Two years ago it was negative N112.1 billion, after naira devaluation inflated its foreign-currency loans. Separately, its parent plans to move the Nigerian waters and premium-beverages business into Peranel, a 50-50 joint venture with Platinum Equity, subject to shareholder and regulatory approval.

At HBM Nigeria, the former Lafarge Africa now controlled by China’s Huaxin Building Materials, technical service fees rose 28% to N21.7 billion. Revenue rose 19%. The agreement sets the fee at 3% of net sales, subject to a ceiling of 5% of Ebitda.

The rise in fees comes after parents spent heavily to repair their subsidiaries’ balance sheets. The naira’s collapse in 2023 and 2024 swelled foreign-currency debts and pushed Nestlé Nigeria, Nigerian Breweries, Guinness Nigeria and MTN Nigeria into negative equity.

International Breweries now has no bank debt. In September, it used its share premium to erase accumulated losses, then returned N84 billion of capital to shareholders. About N82 billion of that went to AB InBev group companies, which own 97.42% of the brewer. Free float is 2.55%.

Nestlé Nigeria remains the most indebted. Its borrowings fell to N426.3 billion from N476 billion in December and about N685 billion in September 2024, but the lender is mostly its own parent, which collects the interest. Guinness Nigeria, bought by Singapore’s Tolaram Group from Diageo in 2024, carried N41 billion of loans and overdrafts with just N1.4 billion of cash.

Three companies paid less. Guinness Nigeria’s royalty and technical fees fell 15% to N9.8 billion. Under Tolaram, it still pays Diageo to use the Guinness brand under licence and royalty agreements struck at the sale. Its revenue rose 20.4%.

MTN Nigeria’s earnings release does not break out fees paid to MTN Group, so it is excluded from the fee totals.

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