Market News

Five publicly quoted manufacturing firms – Honeywell Flour Mills, Beta Glass, Chellarams, SCOA Nigeria and Northern Nigeria Flour Mills (NNFM) – have delivered remarkable returns to investors, each posting over 100 per cent year-to-date (YTD) gains.

The five with a combined market capitalisation of over N244.5 billion have significantly outperformed other stocks on the Nigerian Exchange Limited (NGX) this year, reflecting stronger demand for their stocks.

This performance has drawn significant attention from market operators and investors, who attribute the surge to a combination of factors – strategic operational improvements, favourable government policies and a broader recovery in Nigeria’s manufacturing sector.

For instance, inflation, which stood at 24.48 per cent in January, eased slightly to 24.23 per cent in March, reflecting a gradual stabilisation, though still elevated.

The Federal government has also implemented various measures to address the foreign exchange (forex) crisis, aiming to stabilise the naira, boost investor confidence, and enhance foreign currency liquidity.

Another key factor behind the recent impressive financial results has been the increase in product prices, which, despite potentially lower sales volumes, significantly boosted revenues.

Data from the exchange showed that Betaglass, with a market capitalisation of N106 billion, started the year with a share price of N64.90 kobo. At the close of transactions yesterday, May 12, 2025, the share price closed at N176.70 kobo, adding 172 per cent year-to-date (YTD).

Similarly, Chellarams, which reopened for transactions in January 2025 at a share price of N3.70 kobo, closed at N10.40 kobo, representing an increase of 181 per cent. The company closed its transactions yesterday with a capitalisation of N7.52 billion.

For SCOA with capitalisation of N2.9 billion, its share price rose by 117 per cent YTD, from N2.06 kobo to N4.47 kobo. Honeywell Flour Mills and NNFM, with capitalisation of N112 billion and N16.1 billion, began the year with a share price of N6.30 kobo and N43.90 kobo. The two firms have gained 125 per cent and 106 per cent of their price valuation YTD to close at N14.50 kobo and N90.50 kobo yesterday.

Operators argued that post-pandemic recovery in consumer demand has boosted the revenue of food processing companies like Honeywell Flour Mills and NNFM. According to them, both companies have benefited from a renewed focus on essential commodities, leveraging Nigeria’s large and growing population to drive sales.

Honeywell Flour Mills, for instance, has aggressively expanded its production capacity and diversified its product lines to capture a larger share of the market.

This strategic approach, combined with targeted marketing and distribution efforts, has enabled the company to outperform its peers.Additionally, the sector has gained from government policies aimed at boosting local production. The Central Bank of Nigeria (CBN) FX restrictions on imported food items and ongoing support for backward integration have encouraged domestic manufacturers to scale up operations.

This has reduced reliance on costly imports and provided a competitive edge for local producers. For companies like NNFM, this policy shift has been particularly advantageous, as it aligns with their core business model of processing locally sourced grains.

Beta Glass has also been a standout performer, riding the wave of increased demand from the beverage, pharmaceutical and cosmetics sectors. As a leading manufacturer of glass containers, the company has capitalised on rising packaging needs and the growth of Nigeria’s fast-moving consumer goods (FMCG) market.

Its strategic investments in modernising production facilities and improving energy efficiency have further strengthened its profit margins, making it a compelling choice for investors seeking exposure to the manufacturing sector.

Chellarams and SCOA Nigeria, known for their diversified business portfolios, have also seen significant share price appreciation this year.

The company, with its focus on industrial raw materials and consumer products, has benefited from the resurgence in manufacturing activity, while SCOA Nigeria, with interests in automobile assembly, power generation, and real estate, has leveraged its diverse revenue streams to weather economic uncertainties.

Both companies have also taken advantage of opportunities in Nigeria’s expanding construction and infrastructure sectors, supporting their bottom lines.

Despite these impressive gains, sustaining this momentum will require careful management. Analysts warn that rising inflation, foreign exchange volatility, and high energy costs could pose significant challenges to the sector.

To sustain their growth, these companies must focus on operational efficiency, cost management, and product innovation while relying on the government’s efforts to stabilise the forex market and improve the ease of doing business in Nigeria.

President of the Independent Shareholders Association of Nigeria, Moses Igbrude, said that the recent impressive performance by companies reflects their ability to adjust to the challenging economic environment shaped by government reforms. The removal of the fuel subsidy, naira float, and other policies initially created significant instability, pushing many companies into losses.

However, Igbrude believes the current stability allows firms to plan their operations with greater certainty, which benefits the broader economy. He also emphasised the importance of adopting strong strategies to sustain this momentum, ensuring consistent returns for shareholders.

Also speaking, the President of the Ibadan Zone Shareholders Association, Eric Akinduro, highlighted the resilience and potential of Nigeria’s manufacturing sector despite the challenging business environment.

He pointed out that Nigerian manufacturers are becoming more adept at navigating economic pressures, including high inflation, rising production costs, and forex volatility.

Akinduro also expressed confidence in the sector’s long-term prospects, noting that as companies gain a deeper understanding of the economic landscape, they are better positioned to deliver solid returns to investors.

A look at the company’s financial performance showed that Beta Glass Plc posted impressive financial results for 2024, reporting a full-year pre-tax profit of N21 billion, a substantial 122.89 per cent increase from the N9.4 billion recorded in the previous year.

The company’s fourth-quarter pre-tax profit also surged, reaching N8.6 billion, a 432.78 per cent increase from N1.6 billion achieved in Q4 2023.

Also, for the first quarter ended March 31, 2025, Beta Glass continued this strong momentum, delivering a pre-tax profit of N15.2 billion, up 638.6 per cent from N2.06 billion in the same period last year, driven primarily by robust revenue growth.

Similarly, Northern Nigeria Flour Mills Plc reported significant gains in its third-quarter results, achieving a pre-tax profit of N2.3 billion, a 291.6 per cent rise from the N589.6 million reported in the same period in 2023.

This brought its total pre-tax profit for the nine months ending December 31, 2024, to N4.1 billion, reflecting a 164.37 per cent year-on-year increase.