Inflation, power, weak Naira push manufacturing cost up by 30% in H1, 21

Nigerian manufacturers ran on increased production cost in the first half of the year, as foreign exchange challenges, epileptic power supply continue to batter their bottom-line gains.

According to data compiled by Ripples Nigeria, the total cost of listed firms across various categories rose by 30 percent to N725 billion in the first half of the year from N557 billion in the same period in 2020.

The cost incurred by these firms represented 51 percent of their combined revenue of N1.41 trillion.

This pressure faced by the firms will be more significant should administrative and distribution costs be factored in for this analysis.

Some of the half Year audited financials surveyed include NASCO, Unilever, Cadbury, Nestle, Nigerian Breweries, BUA cement, Dangote Cement Plc
Others are Lafarge, Fidson Healthcare and May & Baker Nigeria Plc.

By categories Cement producers (Dangote Cement, Lafarge, and BUA) incurred a total production cost of N439.2 billion. This is 45.7 percent of their total income of N959.8 billion.

Dangote reported income of N691 billion, up from N476 billion in the same time in 2020. But the company incurred 36.4 percent increase in production cost to N276.1 billion in H1, 2021 from N202.4 billion H1, 2020.

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Lafarge Africa’s revenue also rose by 20.30 per cent to N145.02 billion from N120.54 billion in H1 2020. But incurred N96.9 billion in production cost.

BUA Cement revenue increased by 22.73 per cent from N101.26bn in H1 2020 half-year to N124.28bn in H1 2021 and recorded N66 billion production cost in H1,21 from N55.3 billion in H1, 2020.

While the selected consumer firms for this the analysis (NASCO, Uniliver, Cabury, Nestle, and Nigerian Breweries) incurred N275.7 billion production costs, accounting for 63.1 percent of their total revenue of N436.5 billion, drug manufacturers (Fidson healthcare and May & Baker) both incurred 54.6 percent production cost to revenue.

The drug markets incurred N10 billion production cost out of the 18.4 billion revenue from sales.

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