Consumer goods firms have demonstrated resilience in the face of rising inflation, spiraling borrowing costs, and foreign exchange volatility as they stood out as the best performing stocks for the month of May.
Data gathered by Meristem Securities shows that in May 2025 the NGXConsumerGoods index (NGXCNSMRGDS) returned 18.71 percent Month on Month (MoM) MERI-Agric, 10.65 percent; 10.40 MERI-TELCO, 10.40 percent. NGXIndustrial, 2.39 percent; NGXBanks, 1.86 percent, and NGXInsurance, 1.60 percent.
The NGXOil and Gas shed -1.17 percent as the price of crude oil remains volatile due to the uncertainty surrounding the tariffs imposed by the United States President, Donald Trump.
It appears the unification of the exchange rate two years ago which stoked foreign exchange losses for consumer goods firms is yielding fruits as there is relative stability in the foreign exchange market. Also, the firm quarter financial statement of firms shows they returned to the path of profitability.
That helped compliment strong sales. Sector players have been raising the price of key products to cushion the effects of rising input costs.
“In our view, the accommodative monetary policy stance towards the end of the month, coupled with a favorable macroeconomic backdrop (lower inflation figures in April), may have supported the upbeat sentiment towards the sector,” said analysts at Meristem Securities Limited.
The largest and the most liquid consumer goods firm collectively posted N270.02 billion profit in the first three months of March 2025, from a loss position 0f N338.87 billion, according to data gathered by MoneyCentral.
The Consumer Price Index (CPI), which measures the rate of change in prices of goods and services, eased to 23.71 per cent in April compared to 24.23 per cent in March, National Bureau of Statistics (NBS).
While firms have surmounted the foreign exchange revaluation of headwinds, rising cost of production remains a downside risk. Most of them are susceptible to imported inflation because they order their raw materials from abroad and overseas.
The largest consumer goods firms incurred N2.741n trillion in total costs (cost of sales plus administrative and distribution expenses) as at the first three months of 2025, which is 44.36 percent higher than 2024’s N1.49 trillion.
The average operating cost ratio for the industry is 92.13 percent as at March 2025, from 88.84 percent the previous year. This means on average they spend 92kobo to create sales.
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