Manufacturers’ Unsold Goods Hit ₦1.77trn As Costs Mount

Manufacturing companies across sectors listed on the Nigerian Exchange Limited (NGX) entered the second quarter of 2026 with combined inventories, or unsold goods, of about ₦1.77 trillion, as their cost of sales rose to ₦1.43 trillion, highlighting growing pressure on businesses and consumers.

Findings showed that combined inventories increased by 10.6 per cent year-on-year from ₦1.597 trillion in the first quarter of 2025, while combined cost of sales climbed by 13.7 per cent from ₦1.261 trillion to ₦1.434 trillion over the same period.

The figures point to a manufacturing environment where companies are carrying substantially more stock while simultaneously facing higher costs of producing and selling their goods. The inventory build-up cuts across consumer goods, building materials, agriculture, food processing and other manufacturing-related businesses.

However, the data showed significant differences among companies, suggesting that inventory accumulation was being driven by a combination of production requirements, changes in demand, input costs and company-specific business conditions.

Dangote Cement had the largest inventory position at ₦703.58 billion in the first quarter of 2026, compared with ₦671.55 billion a year earlier, representing a 4.8 per cent increase.

UACN recorded one of the sharpest increases, with inventories rising by 231.8 per cent to ₦189.55 billion from ₦57.13 billion. Okomu Oil Palm followed with a 90.3 per cent increase to ₦39.90 billion, while Livestock Feeds rose 35.9 per cent to ₦9.14 billion.

PZ Cussons’ inventory increased by 29.7 per cent to ₦69.37 billion, while Beta Glass rose by 28.8 per cent to ₦25.21 billion and Vitafoam’s inventory increased by 12.3 per cent to ₦23.20 billion. Lafarge’s inventory rose by 7.3 per cent to ₦110.64 billion, Presco increased by 3.6 per cent to ₦58.90 billion, while International Breweries rose by 2.2 per cent to ₦95.83 billion.

Some manufacturers, however, recorded declines. Northern Nigeria Flour Mills’ inventory fell by 34.6 per cent to ₦31.46 billion, while NASCON Allied Industries declined by 17.1 per cent to ₦14.34 billion. Cadbury Nigeria’s inventory dropped by 16.9 per cent to ₦27.14 billion, Unilever Nigeria fell by 7.7 per cent to ₦23.42 billion, Nestlé Nigeria declined by 7.3 per cent to ₦167.84 billion, while Nigerian Breweries fell by 6.7 per cent to ₦171.92 billion.

While inventories increased by 10.6 per cent, cost of sales expanded at a faster pace of 13.7 per cent, raising concerns about pressure on manufacturers’ gross margins if the trend persists.

Dangote Cement recorded cost of sales of ₦448.73 billion, up 10.2 per cent from ₦407.27 billion. Nigerian Breweries recorded ₦233.16 billion, an increase of 7.4 per cent, while Nestlé Nigeria’s cost of sales rose by 10.8 per cent to ₦194.07 billion.

UACN recorded the biggest percentage increase in the dataset, with cost of sales rising by 226.8 per cent from ₦41.75 billion to ₦136.41 billion. PZ Cussons’ cost of sales increased by 51.1 per cent to ₦25.04 billion, while Champion Breweries rose by 90 per cent to ₦8.20 billion.

On the other hand, NASCON recorded a 21.1 per cent decline in cost of sales to ₦18.89 billion, while Northern Nigeria Flour Mills’ cost of sales fell by 35.9 per cent to ₦5.95 billion. Okomu Oil Palm recorded a 24.5 per cent reduction to ₦11.70 billion, while International Breweries’ cost of sales declined by 9.1 per cent to ₦103.61 billion. Cadbury Nigeria and Unilever, however, recorded increases of 15.4 per cent and 15.8 per cent respectively.

Commenting on the inventory increase, President of the Chartered Institute of Stockbrokers, Fiona Ahimie, said the development reflected a combination of supply- and demand-side factors.

She said many manufacturers had invested significantly in expanding production capacity as operating conditions became more stable and access to foreign exchange improved, resulting in higher production.

However, she noted that demand had not expanded at the same pace, with elevated prices relative to household incomes continuing to weigh on consumer spending.

“Many households are still prioritising essential goods and cutting back on discretionary purchases. Businesses are also becoming more cautious with inventory management and procurement decisions,” she said.

Ahimie added that some manufacturers were deliberately building inventories in anticipation of stronger demand in coming quarters, meaning higher stocks could reflect both slower sales and strategic positioning.

On production costs, she said manufacturers continued to operate in a high-cost environment despite improvements in some macroeconomic indicators.

“Energy remains one of the biggest cost drivers, with many companies still relying on alternative power sources. Transportation and logistics costs also remain elevated, while the prices of many raw materials, both imported and locally sourced, have remained relatively high,” she said.

She added that elevated interest rates had increased the cost of financing working capital and expansion, while businesses were still adjusting to the higher cost structure that followed exchange-rate reforms.

Ahimie urged government to prioritise infrastructure, particularly electricity and transportation networks, saying reliable power would significantly reduce costs for manufacturers that depend heavily on generators.

She also called for policy consistency and greater access to affordable financing for manufacturers and small and medium-sized enterprises, while urging measures to support job creation, improve real incomes and sustain lower inflation.

“As consumers regain spending capacity, manufacturers will experience stronger demand, inventories will decline naturally, and production will become more efficient,” she said.

Managing Director of Highcap Securities Limited, David Adonri, attributed the inventory build-up partly to inflation and declining consumer purchasing power.

He said rising global inflation linked to the Iran war had fed into domestic manufacturing costs, while higher domestic energy and distribution expenses had added to cost pressures.

“Insecurity crippled several domestic sources of raw materials,” he said.

Adonri said boosting aggregate demand would remain difficult without addressing inflation and supply constraints, adding that insecurity had become a major obstacle to production.

“Without solving the insecurity challenge, the rural economy cannot function and help to close the supply gap notwithstanding an increase in public and private spending,” he said.

Managing Director of Arthur Steven Asset Management Limited, Olatunde Amolegbe, said the inventory increase was likely the result of both demand- and supply-side pressures.

Although inflation had moderated from its peak of 33.4 per cent in 2024 to 15.91 per cent as of June 2026, he said the effects of the earlier period of high inflation continued to weigh on household purchasing power.

“Consumer demand is gradually recovering but remains below the pace required to absorb production, particularly for discretionary and non-essential goods,” Amolegbe said.

He also noted that the monetary policy environment remained restrictive, with the Monetary Policy Rate maintained at 26.5 per cent at the Monetary Policy Committee meeting of July 22, 2026.

“High financing costs continue to constrain consumption, inventory financing, and business expansion,” he said.

According to Amolegbe, many manufacturers had sustained production to preserve market share, meet distribution commitments and maintain efficient capacity utilisation, even though sales growth had not kept pace with production.

He added that some companies might also be maintaining higher inventories as a strategic buffer against supply-chain disruptions or future increases in input costs.

On production costs, Amolegbe said manufacturers continued to face structural pressures despite greater exchange-rate stability, particularly those dependent on imported raw materials, machinery and industrial inputs.

He said energy, logistics, transportation and utility costs remained high, while elevated interest rates had increased financing costs for working capital and capital investment.

Amolegbe called for continued government investment in reliable power supply, transportation infrastructure and logistics networks, alongside expanded access to affordable financing for productive sectors.

He also advocated support for local sourcing of raw materials through backward integration initiatives and targeted fiscal incentives for manufacturers.

“On the demand side, policies that promote employment, improve productivity, and support sustainable growth in real household incomes would strengthen purchasing power and stimulate consumer demand, helping manufacturers reduce inventory levels,” he said.