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It appears the largest manufacturers in Africa’s largest economy will continue to pass on rising input costs to the final consumers in the form of higher prices as due to unabated imported inflation.
Dangote Cement Plc, BUA Foods Plc, BUA Cement Plc , Guinness Nigeria Plc , Flourmills Plc, Lafarge Africa Plc, Nestle Nigeria Plc, and Nigerian Breweries Plc , collectively incurred N1.94 trillion in raw material costs in the first six months of 2023, according to data gathered by MoneyCentral.
That represents 24.56 percent growth compared to 2022’s N1.56 trillion as the abrupt unexpected devaluation of the currency that balloons inflation sent the price of imported raw material skyrocketing.
Drilling down into the books of these firms shows raw material and packaging costs make up 89.70 percent of Flourmills’ total cost of sales, as the company posted a net loss brought on by foreign exchange losses.
Nigeria’s annual inflation rate rose to 24.08 per cent in July, the highest in 18 years, according to the recent data from the National Bureau of Statistics (NBS).
Cost pressures have necessitated the hike in the price of key products by listed players to help compensate for spiraling input costs, but foreign exchange losses contributed to the erosion of profit margins of firms.
The average net profit margin of the largest manufacturers fell -51.95 percent in June from a positive figure of 18.13 percent the previous year, according to MoneyCentral calculations.