The September Gen Z violent protest against corruption and the social media ban has not only inflicted economic losses running into billions but also dented the profits of multinational companies operating in Nepal.

Unilever Nepal, the country’s largest fast-moving consumer goods (FMCG) manufacturer, reported a 43 percent quarter-on-quarter drop in its net profit to Rs300 million, according to its latest financial statement.

The company’s total income also fell 11.01 percent in the first quarter of the current fiscal year.

Unilever said in its quarterly review that the unrest, curfews and restricted movement during the peak festive season dampened consumer sentiment and hit sales across all segments, led by personal care, beauty and wellbeing, and home care.

“The first quarter of the fiscal year presented unprecedented challenges for Unilever Nepal, stemming from political instability, damage to retail infrastructure and heightened macroeconomic volatility. These factors severely impacted our sales performance, supply chain continuity and overall financial stability,” the maker of Dove and Sunsilk said in its statement.

The protests and subsequent floods caused widespread destruction of the retail network, the company said.

“One of our key customers, Bhatbhateni Supermarket, faced multiple outlet attacks and the complete destruction of its central warehouse, with several stores rendered inoperable.”

Major taxpayers such as Bhat-Bhateni Supermarket, Chaudhary Group and Ncell have suffered severe losses.

Unilever said roadblocks and curfews paralysed logistics, leading to temporary halts to distribution and inventory movement. With the disruptions coinciding with the festive period, seasonal sales dropped sharply.

The company added that pressure from the grey market intensified after India’s goods and services tax (GST) cuts, which fuelled parallel imports of soaps and personal care products into Nepal.

The company said recovery would depend on political stabilisation, government intervention and the restoration of retail infrastructure. “We are actively engaging with government authorities to implement pricing and portfolio strategies to counter grey market pressure arising from recent GST changes,” it said.

India’s revised GST regime—widely referred to as GST 2.0—came into effect on September 22. Most goods and services now fall under either the 5 percent or 18 percent tax slab, while ultra-luxury items face a 40 percent levy.

Nepali consumers are expected to benefit from cheaper imports of food, electronics and automobiles, but experts warn the new structure could hurt domestic production and employment while encouraging smuggling and informal imports.

In contrast to Unilever’s slump, Bottlers Nepal (Balaju)—the producer of Coca-Cola, Fanta and Sprite—reported a 281.20 percent jump in net profit to Rs322 million in the first quarter.

The company credited the surge to improved productivity and cost efficiency, despite challenges posed by inflation and currency devaluation.

The company said it continues to focus on optimising production processes and implementing cost-saving measures.

However, it acknowledged persistent challenges, including rising operational costs, expensive rural distribution and the economic slowdown triggered by external factors. The depreciation of the Nepali rupee has also increased the cost of imported raw materials.

Consumer price inflation in Nepal stood at 1.87 percent year-on-year in mid-September, down from 3.86 percent. Food and beverage inflation fell by 1.34 percent, while non-food and services inflation reached 3.7 percent, according to Nepal Rastra Bank.

The Nepali currency has weakened from around Rs135.31 per US dollar to Rs142.17 a dollar.

Bottlers Nepal Tarai, the group’s subsidiary, posted a net profit of Rs274 million, up 234.75 percent, citing similar operational efficiencies.

Nepal has received a sovereign credit rating of 'BB-’ from the international agency Fitch Ratings for 2025, the second consecutive year, underscoring that the foreign exchange reserve is in surplus, which will help repatriate the profits of foreign investors.

BB- is considered a non-investment-grade (speculative) rating, indicating a relatively higher risk than investment-grade countries.

However, for Nepal, experts say, challenges remain in achieving investment-grade status due to political instability, weak governance, low investment in the productive sector, and delayed structural reforms.