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Manufacturers count losses as cost of production rises by 30% in one year

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Nigerian manufacturers are groaning under the weight of heavy cost of production as foreign exchange challenges and epileptic power supply continued to undermine their activities.

The analysis of the financial reports of 22 firms listed on the Nigeria Exchange Group (NGX) revealed that the total cost of production for the companies across various categories hit N2.19 trillion in 2021.

This was 30.48 percent higher than the N1.68 trillion production cost incurred by the companies in 2020.

The companies were picked from the cement industry, paint sectors, pharmaceutical industry, and the consumer goods sectors.

When compared to the inflation rate figure, the manufacturing cost was higher than the 18.60 percent inflation rate recorded in June.

This means the company will have to pass costs to customers to cover its lost revenue.

A breakdown of the figure shows that Dangote Cement, BUA Cement, and Lafarge Africa collectively incurred N741.17 billion in total production cost.

READ ALSO: Manufacturers say CBN’s new lending rate of 14% will bring hardship to Nigerians

The figure was 28.68 percent higher than the N575.95 billion the three companies spent in 2020.

Dangote Cement, the most capitalized firm in Africa’s largest economy, spent N129.95 billion on fuel and power consumed this year.

This was also 31.29 percent higher than the N98.97 billion the firm spent last year.

Similarly, BUA Cement spent N43.58 billion on fuel in 2022, which is 64.66 percent higher than the N26.46 billion the company expended the previous year.

The largest quoted consumer goods firms such as Nestle, BUA foods and others, collectively incurred N1.40 trillion in total production expenses, a figure that was 31.12 percent higher than last year’s N1.07 trillion.

Fidson Healthcare, GlaxoSmithKline, May and Baker, and Neimeth Pharmaceutical, the largest drug makers in Nigeria, collectively incurred N38.08 billion in the first six months of the year.

This was also 41.13 percent higher than N26.98 billion for last year.

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