SEPTEMBER 09, 2024

Seven consumer goods firms listed on the Nigerian Exchange Group (NGX) have seen their raw materials costs more than double in the first half (H1) of 2024, a BusinessDay analysis shows.

The firms’ input costs rose to N1.27 trillion, indicating 121 percent growth from N576.5 billion in the corresponding period of 2023.

The companies analysed include BUA Foods Plc, Nigerian Breweries Plc, Dangote Sugar Refinery Plc, Nestle Nigeria Plc, BUA Cement Plc, Nascon Allied Industries Plc and Champion Breweries Plc.

A further breakdown of the data reveals that BUA Foods Plc spent the most on raw materials, amounting to N421.5 billion, followed by Nigerian Breweries Plc which recorded N256.4 billion in input costs.

Dangote Sugar Refinery Plc recorded N239.6 billion raw materials cost; Nestle Nigeria Plc (N232.9 billion), BUA Cement Plc (N94.89 billion), Nascon Allied Industries PLC (N24.73 billion) and Champion Breweries Plc (N3.63 billion).

“The increase in raw materials costs in the first half of 2024 occurred because most of the consumer goods firms were relying on importation of raw materials to produce their products and as a result, there was a heavy exposure to the FX fluctuations which has caused inflation,” Uchenna Uzo, a professor of marketing at Lagos Business School, said.

He said the consumer goods firms’ dependence on raw materials, especially agricultural producers, has suffered from food shortages caused by insecurity and that has also driven inflation as Nigeria’s inflation is influenced mainly by food inflation.

“Energy prices and problems with the importation of diesel have also led to the rise of raw materials,” Uzo stated.

He added that for consumers, there will be more of brand switching and alternation between using cheaper brands if the increase in raw materials cost is passed on to the consumers.

Uzo urged producers to alternate local sourcing of raw materials and not minimise the quality of their produce.

The latest Foreign Trade in Goods Statistics Report for Q1 2024 reveals that the value of total imports stood at N12.64 trillion in the first quarter of 2024 from N6.47 trillion recorded in the corresponding quarter of 2023.

Raw materials import increased to N1.47 trillion in H1 of 2024 from N555.47 billion in the same period of 2023, NBS report said.

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“In the first quarter of 2024, China ranked highest among the top trading partners on the import side, followed by India, United States of America, Belgium, and The Netherlands,” the report stated.

The naira on Tuesday traded at N1,640 following strong demand for dollars amid scarcity on the parallel market, popularly called the black market.

This represents 44 percent loss year-on-year and a daily loss of N5 when compared to N918 and N1,635 quoted in September 1, 2023, and on Monday, September 2, 2024, according to street traders and some online platforms that collate exchange rates at the unregulated market.

The dollar supplied by willing buyers and willing sellers declined to the lowest in 18 trading days. It dropped by 58.81 percent to $71.18 million on Monday from $172.80 million recorded on Friday at NAFEM.

Firm analysis

BUA Foods Plc

BUA Foods Plc recorded 162 percent growth in its raw materials cost in the first half of 2024.

The firm’s raw materials cost surged to N421.5 billion in the first half of 2024 from N161.2 billion in the same period of 2023.

After-tax profit increased to N130.9 billion from N95.2 billion while revenue grew to N672.4 billion from N320.9 billion.

BUA Foods operates as a food and fast-moving consumer goods company where it processes, manufactures and distributes food products such as flour and pasta, sugar, refined oil, and rice. BUA Foods serves customers in Nigeria.

BUA Cement Plc

BUA Cement Plc recorded 141 percent growth in its raw materials cost in H1, 2024.

Its raw materials cost surged to N94.89 billion in H1 of 2024 from N39.42 billion in the same period of 2023.

After-tax profit dropped to N34.25 billion from N63.6 billion while revenue surged to N363.9 billion from N221.1 billion.

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BUA Cement Plc is a publicly listed firm headquartered in Nigeria. It produces and markets cement products in the country and remains the second largest producer in Nigeria after Dangote Cement.

Nigerian Breweries Plc

Nigerian Breweries Plc recorded 118 percent growth in its raw materials cost in H1 2024.

The firm’s raw materials cost surged to N256.4 billion in the first half of 2024 from N117.6 billion in the similar period of 2023.

After-tax loss deepened to N85.2 billion from N47.6 billion while revenue surged to N479.8 billion from N277.4 billion.

Nigerian Breweries Plc, is the largest brewing company in Nigeria. It serves the Nigerian market and West Africa.

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Dangote Sugar Refinery Plc

Dangote Sugar Refinery Plc recorded 105 percent growth in its raw materials cost in the first half of 2024.

The firm’s raw materials cost surged to N239.6 billion in H1 of 2024 from N116.9 billion in the same period of 2023.

Loss deepened to N144 billion from N27.9 billion while revenue grew marginally to N295.6 billion from N202.8 billion.

Dangote Sugar Refinery is an integrated sugar business. Its goal is to produce 1.5 million tonnes of refined sugar every year from locally grown sugarcane within the next 10 years – to serve local and export markets from factories and plantations across Nigeria.

Nestle Nigeria Plc

Nestle Nigeria Plc recorded 90 percent growth in its raw materials cost in the first half of 2024.

The firm’s raw materials cost surged to N232.9 billion in the first half of 2024 from N122.3 billion in the same period of 2023.

After-tax loss widened to N176.9 billion from N49.9 billion while revenue surged to N406.9 billion from N261.8 billion.

Nestle Nigeria Plc is a publicly listed food and beverage specialty company headquartered in Lagos. It’s mostly owned by a holding company based in Switzerland and have ties to the company Tolaram Group. The company was founded in 1961 and conducted trading under the name of Nestle Products Nigeria Limited.

Champion Breweries Plc

Champion Breweries Plc recorded 74 percent growth in its raw materials cost in the first half of 2024.

The firm’s raw materials cost surged to N3.63 billion in the first half of 2024 from N2.09 billion in the same period of 2023.

After-tax loss stood at N333 million while the firm recorded an after-tax profit to N29.07 million while revenue surged to N9.54 billion from N5.7 billion.

Champion Breweries Plc is a Nigerian brewing company located in Akwa Ibom state. The company is the producer of Champion lager beer and Champ Malta.

Nascon Allied Industries Plc

Nascon Allied Industries Plc recorded 46 percent growth in its raw materials cost in the first half of 2024.

The firm’s raw materials cost surged to N24.73 billion in the first half of 2024 from N16.94 billion in the first half of 2023.

After-tax profit dropped to N4.84 billion from N5.82 billion while revenue surged to N50.4 billion from N38.2 billion.

Nascon Allied Industries Plc is a Nigeria-based company that is engaged in the processing of raw salt into refined, edible, and graded salt. The Company’s products include salt, seasoning and spices.