Inflation: Manufacturers record 90.6% rise in cost of sales

Nigeria’s manufacturers are facing significant financial challenges due to macroeconomic changes implemented by the Federal Government. 

A key issue is the 90.6% increase in cost of sales, driven by factors like inflation, foreign exchange volatility, and rising production costs. Despite efforts such as backward integration to reduce reliance on imports, many manufacturers still face high raw material costs, with imports rising 88% year-on-year in 2024. 

To cope, companies have resorted to aggressive cost-cutting measures, including layoffs and price hikes. Despite this, they’ve managed to reduce their exposure to bank loans, although high interest rates continue to impact financial costs. 

The total cost of sales for the top 12 consumer goods manufacturers surged by 88.5% to N3.91 trillion in 2024, with individual companies like Nestlé Nigeria, Nigerian Breweries, and BUA Foods experiencing significant increases in costs. Raw material costs also climbed to N2.2 trillion, while finance costs rose by 81% to N1.2 trillion. 

The combined turnover for these firms grew by 67.7% to N7.6 trillion, but their loss before tax (LBT) rose by 76.6%, totaling N407.4 billion in 2024. 

Despite these challenges, company leaders expressed optimism, highlighting resilience and growth through strategic pricing, market expansion, and operational improvements.