According to an analysis by Naijastreetmatters of the most recent financial statements of twelve listed consumer goods companies, the combined loss of International Breweries Plc, Cadbury Nigeria Plc, Nigerian Breweries Plc, Nestle Nigeria, and Dangote Sugar Refinery Plc fell to N222.5 billion in the second quarter of 2024, compared to N331.4 billion in the first quarter. However, the loss increased from N212.9 billion to N212.9 billion per year.
In the first quarter (Q1), Champion Breweries Plc experienced a loss, but rose to a profit of N44 million in the second quarter (Q2). A total profit of N102.9 billion was declared by BUA Foods Plc, Lafarge Africa, and Nascon Allied Industries Plc, which was above N62.2 billion.
Unilever Nigeria Plc, Dangote Cement Plc, and BUA cement Plc’s earnings dropped to N17.5 billion from N134.0 billion in Q2, while the 12 manufacturers reported a combined revenue of N2.48 trillion in Q2, 13.2% higher than Q1. Policy reforms, including stable foreign exchange rates, are contributing to these results, with manufacturers benefiting from increased foreign investment and better business planning.
The Nigerian government has provided tax incentives and levies to boost the economy, with some manufacturers shutting down non-profitable plants and focusing on viable ones. The Manufacturers Association of Nigeria (MAN) suggests that some firms may have reduced their operations volume, reducing their liability or commitment. Over the past eight years, Africa has experienced two recessions due to oil price collapse, COVID-19 disruptions, and government inability to reform the economy.
President Bola Tinubu’s reforms, including removing petrol subsidies and naira devaluation, have led to a record-high inflation rate in Nigeria, with headline inflation rising to 28.92 percent in December 2023. This has weakened consumer purchasing power and increased the finance costs of multinationals, primarily in foreign currencies.
In Q2, 11 manufacturers’ finance costs decreased to N496.8 billion from N549.9 billion in Q1. Nigeria’s inflationary pressures slowed since February 2024, but increased to 34.19% in June. The government expects inflation to slow down before the end of the year, with fundamentals likely to change by Q3.
The Central Bank of Nigeria (CBN) has increased its monetary policy rate (MPR) to 26.75 percent for the third consecutive time, raising the total hikes since February to 800 basis points. The liberalisation of the Foreign Exchange (FX) regime has weakened the naira from N463.38/$ to N1,570.9/$, making scenario planning easier. This has led to manufacturers focusing on local sourcing for inputs.
