Business
Manufacturers wail as unsold goods pile up in warehouses
Manufacturers of fast-moving consumer goods, FMCG are in dire agony over the continued rise in unsold goods in their warehouses, a development which would lead to a further significant decline in output level in the sector.
The continued rise in unsold goods is caused by two factors namely the rising cost of living and the declining purchasing power of the citizens.
Financial Vanguard’s findings show that due to the downturn in the consumers’ disposable income, the stock of unsold goods for manufacturers in the fast-moving consumer good, FMCG, sector of the economy rose Year-on-Year (YoY) by 27 per cent during the financial year ended December 31, 2023. The sector operators also indicated that the situation is worsening in 2024 as they expect to report over a 30 per cent rise in unsold goods in the first quarter of the year, Q1’24.
Consequently, they hinted that the output levels have been going down steadily since mid-last year, when the Central Bank of Nigeria (CBN), the report showed that capacity utilisation in the food and beverages sector fell to 49 per cent from 61 per cent in the corresponding period in 2022, indicating a 20 percentage point decline.
Nigerians have been battling with inflationary pressures with its curtailing effect on consumers’ purchasing power in the last eighteen months.
The headline inflation rate has been on a constant increase, rising to 28.82 percent in December 2023 from 21.34 per cent in December 2022, triggered by various factors including high energy cost, and insecurity, especially in the farming communities in Nigeria, among others.
Within the same period also, food inflation surged to 33.93 percent from 23.75 percent a year ago.
The trend has continued unabated in 2024 with headline and food inflation moving further up to 33.69 per cent and 40.53 percent in April from 29.90 percent and 35.41 percent at the beginning of the year respectively.
A combination of the massive increase in inflation coupled with naira devaluation had resulted in price mark up by manufacturers to cover high input costs.
But this cost coverage measure has also alienated many of their consumers, thereby slowing down sales.
Financial Vanguard’s findings from the operations of 15 major FMCGs clearly show a burdensome price index escalating the stock of unsold goods amounting to N104.45 billion despite the huge cut in production quantity.
The companies are BUA Foods Plc, Dangote Sugar Refinery Plc, Nestle Nigeria Plc, Presco Plc, Cadbury Nigeria Plc, Okomu Oil Nigeria Plc, NASCON Allied Industries Plc, May & Baker Nigeria Plc, Fidson Healthcare Plc, and Neimeth Pharmaceuticals Plc.
Others are Guinness Nigeria Plc, Champion Breweries Plc, Flour Mills of Nigeria Plc, Nigerian Breweries Plc and Honeywell Flour Mills Plc.
Companies’ records
The breakdown shows that while a number of the companies recorded a reduction in the level of their stock of unsold goods, palm oil producers – Okomu Oil Palm Plc and Presco – took the biggest hit. Industry observers believe the oil palm industry should not be recording such poor performance given how essential the product is to the average Nigerian family.
Presco, the leading palm oil producer, recorded the highest stockpile of unsold goods as the inventory of finished unsold goods rose by 249.4 per cent to N1.45 billion, followed by May & Baker Plc and Okomu Oil Palm, the second largest palm oil producer, with 160.2 per cent and 124 percent increase in their inventory of unsold goods respectively.
Dangote Sugar Refinery Plc, Flour Mills of Nigeria Plc and Cadbury Nigeria Plc also ranked among the worst with record increases of 92.9 percent to N9.76 billion, 74.1 percent to N30.75 billion and 71.5 per cent to N3.55 billion in their stock of unsold goods respectively.
Strangely, all brewers in the report recorded reduction in their unsold goods.
Reacting, Director General of the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), Sola Obadimu, said the findings are not surprising, adding that until economic indices are stable, the situation may persist.
His words: “As I always say, we’re in a ‘stagflation’ situation, meaning – persistent rising inflation and high unemployment rates in a static wage situation. The wages are not just static, they’re declining in value in real terms as a result of inflation. Consumers (and industries as well) are also vulnerable/defenceless victims of rising energy costs, unstable forex rates and debilitating infrastructure generally, etc. So, it’s no surprise that inventories are growing.
“We’re all aware of the fact that some major multinationals declared losses for 2023 as a result of the unfavourable economic climate and some chose to leave while others are contemplating. It’s easier for local industries and businesses whose owners can quickly take decisions in the face of constantly changing critical economic indices. These multinationals sometimes have to seek aporovals for some major situations from their global Head Offices which may take a while to come due to lack of adequate understanding of the local environment.
“So, unless we get some sort of stability in critical economic indices and consumer purchasing power increases in value terms, the story may not agreeably be too different in 2024.”
Consumers preference has shifted — Muda Yusuf
Muda Yusuf, Director General, Center for the Promotion of Public Enterprise (CCPE), who blamed the mounting inventory of unsold goods on depreciation in the value of the naira, and high energy cost among others, said that consumers are now reviewing their preferences and are shifting to cheaper substitutes where available.
He said there’s a need to bring down the exchange rate and energy cost to effect a reduction in companies’ cost of production.
He said: “The high level of inventory of finished goods, particularly the unsold inventory, are the consequences of high production cost and the high operating cost that the manufacturers in the FMCG sector have been grappling with over the last one to two years.
“There have been challenges of escalation of cost arising from exchange rate depreciation, high energy cost, high cost of logistics and challenges around the high cost of funds.
“These are the key issues and, naturally, when the production and operating costs increase, the natural thing is for the increase in cost to be passed on to the consumers in the form of high prices.
“So, what we are seeing is that the prices of some of these products have gone up significantly and some by as high as 50% and in some cases, even 100% in the last year.
“And in an environment where the purchasing power is also weak, where the level of poverty is also high, naturally, these inventories will be very slow in terms of outflow from the warehouses because of the weak purchasing power of the consumers.
“There’s also an element of consumer resistance due to this high cost of production. There is also an element of substitution. For some of those products that have substitutes, consumers may decide to go for cheaper substitutes because of the high prices.
“So, basically, these are the factors that are responsible for the high level of inventory of finished goods that we have seen in recent times.”
Speaking on the way out, Yusuf said there’s a need to put strategies in place to ensure a reduction in operating cost, a reduction in logistics costs and a strengthening of the purchasing power of the citizens.
Need to stabilize FX market
He expressed the need to stabilize and boost supply in the foreign exchange (FX) market in order to moderate the depreciation of the currency.
According to him, this will result in a reduction in operating and production cost.
“Once the currency strengthens, the cost of production will, naturally, be less; the cost of logistics, if the energy crisis goes down, will also begin to decelerate.
“Then, of course, there’s also the element of the cost of clearance of cargo.
“These cargoes could be raw materials, it could be intermediate products, and it could be machinery that is used by any of these manufacturers.
“The current methodology of determining the exchange rate for the computation of import duty has made the cost of cargo clearance very prohibitive.
“So, if the government through the fiscal and monetary authorities could do an adjustment to this by fixing the exchange rate for the computation of import duty to between N800 – N1,000/$ and this is fixed for may be three months, that will also help to bring down some of this cost and make the products a lot more affordable because the key issue here is the affordability of these products.
The more affordable they are, the lesser the level of unsold goods,” Yusuf added.
According to him, “The danger in the level of this unsold inventory is that some of these products have expiry dates, which is another risk to these businesses.
It is a good thing that the government is talking about minimum wage. If the workers are empowered, we are likely to see an improvement in demand for some of these products.
“So, there’s a supply side issue to bring down the costs of production, operation and logistics and cost of funds.
“There’s also the demand side issue of empowering the consumer to have the purchasing power to buy these products.”
Rise in unsold goods weakens profitability — FSL Securities
Commenting also, Victor Chiazor, Head, Research at FSL Securities, said: “The 27% rise in inventory for players in the fast-moving consumer goods sector could be attributed to two factors.
“The first could be that the rise is a result of the company’s inability to drive sales due to the rising cost of goods which may have slowed down the volume of goods sold during the period, leading to a rise in inventory.
“Also the second reason for the increase in inventory could be deliberate and the company may decide to increase its inventory position to enable it to plan around the significant volatility in the cost of goods which has remained unpredictable in recent times.
“This helps the company manage the risk around a possible increase in production cost.
“However, whatever the case may be, it has a terrible effect on the course of operation for the business as a slowdown in sales will weaken profitability and a deliberate strategy to increase inventory also ties down capital which could have been raised via borrowing at a high-interest rate given the interest rate environment.
“The government will have to deal with issues around FX volatility, rising energy cost, rising cost of borrowing, bad infrastructure amongst other issues, all of which increase input cost for the manufacturer.”
Source: Vanguard
There has been a surge of enthusiasm among many Nigerians as President Tinubu’s economic policies begin to yield promising outcomes.
The Central Bank of Nigeria (CBN) has enacted more stringent controls while sustaining a lower exchange rate at the official windows. Click link to continue reading.
The black market exchange rate for the dollar to naira continues to highlight Nigeria’s forex supply challenges, with many individuals and businesses relying on the parallel market for transactions.
CBN maintains tighter controls and a lower rate at official windows, limited access and allocation restrictions force most importers, businesses, and students abroad to turn to the parallel market, where prices reflect actual demand and supply pressures. Click link to continue reading.
The Dollar to Naira exchange rate in the black market continues to highlight Nigeria’s forex supply challenges, with many individuals and businesses relying on the parallel market for transactions.
CBN maintains tighter controls and a lower rate at official windows, limited access and allocation restrictions force most importers, businesses, and students abroad to turn to the parallel market, where prices reflect actual demand and supply pressures. Click link to continue reading.
The exchange rate of the Dollar to the Naira in the black market serves as a stark indicator of the ongoing foreign exchange supply challenges facing Nigeria.
As the official market remains constrained by stringent regulations enforced by the Central Bank of Nigeria (CBN), many individuals and businesses find themselves increasingly dependent on the parallel market to fulfill their currency needs.
The naira traded near a five-month high at 1514.86/$ on the official window at the close of last week, according to data from the Central Bank of Nigeria.
This indicates a strong start to September for the domestic currency, which started the month at 1,526.09/$ before closing at 1,514.86/$ on Thursday at the Nigerian Foreign Exchange Market.
The naira had last strengthened below the 1515/$ mark on March 6, when it closed trading at 1,512.30/$ on the NFEM. At the parallel market, it also appreciated, rising to 1,538/$, a 0.02 per cent strengthening.
Analysts maintain that the strength of the naira has been supported by improved liquidity and sustained dollar inflows. The Central Bank of Nigeria also intervened in the market to the tune of about $15bn.
Reviewing the FX market in the past week, AIICO Capital said the FX market opened the week on a calm note, with balanced flows keeping rates stable around $/N1527–1533 and no need for CBN intervention.
“Mid-week, offshore supply and opportunistic buying supported sentiment, lifting NAFEX fixing to $/N1528.13. Activity remained fluid with tight bid-offer spreads, as rates retraced to $/N1527.00 before stabilising.
Momentum improved further as the CBN intervened with $15m, and additional portfolio flows boosted supply, driving a sharp rally to the $/N1519–1523 range.
“By week’s end, the naira sustained gains, trading between $1508.00 and $1529.00. Overall, the currency appreciated strongly, closing at $/N1,514.8671,” said the AIICO Capital experts.
The weekly market report from Cowry Asset Management read, “In the coming week, we expect the naira to trade relatively stable across both the official and parallel markets, supported by sustained dollar inflows and a modest buildup in external reserves. However, pressures from speculative demand and global oil price volatility may cap further gains. The outcome of the OPEC+ meeting will be a key driver for crude oil prices, with any adjustments to production levels likely to influence Nigeria’s external earnings and, by extension, FX market dynamics.”
On the macroeconomic front, the country’s external reserves recorded a modest uptick, rising 0.10 per cent week-on-week to $41.31bn from $41.27bn, largely supported by stronger foreign inflows.
Analysts maintained that this increase in reserves provides an important buffer against external vulnerabilities such as volatile oil prices and currency pressures. It also offers the CBN greater capacity to intervene in the foreign exchange market when necessary, helping to stabilise the naira in the near term.
The outlook for the naira remains stable in the near term, supported by improved US dollar supply.
The black market exchange rate of the dollar to naira continues to highlight Nigeria’s forex supply challenges, with many individuals and businesses relying on the parallel market for transactions.
CBN maintains tighter controls and a lower rate at official windows, limited access and allocation restrictions force most importers, businesses, and students abroad to turn to the parallel market, where prices reflect actual demand and supply pressures. Click link to continue reading.
To uphold its global and continental reputation as one of the most esteemed and reliable firms within its sector, as well as to reflect the prominence of Nigerian billionaire Aliko Dangote in international rankings, Dangote Group has achieved remarkable revenue figures.
Dangote Cement generates its income primarily from the cement utilized in nearly every building project across Nigeria, outperforming nearly all other manufacturing companies in Africa in terms of profitability.
Dangote Cement Plc posted a stunning N2.07 trillion in revenue in just six months of 2025, reaffirming its dominance as Africa’s largest cement producer, according to Nairamettrics.
With half-year revenue already surpassing 57.86% of 2024’s full-year turnover, the company is on track for another record-breaking performance despite volume declines and rising costs.
Dangote Cement Plc is Africa’s biggest cement producer. The company manufactures and sells cement, the essential raw material for building houses, bridges, and roads. Its main plants are in Obajana (Kogi State), Gboko (Benue State), and Ibese (Ogun State).
Through these factories, Dangote Cement supplies Nigeria and other African countries with millions of tonnes of cement every year.
This milestone cements its leadership in Nigeria’s manufacturing sector, highlighting its resilience in a tough operating environment.
Profits nearly tripled year-on-year, supported by strong pricing power and disciplined cost management. Dangote Cement closed H1 2025 with a healthy net profit margin of 25.12%, compared to just 10.79% in the prior year.
Business divisions
Dangote Cement keeps things simple. Its operations are divided into two broad areas:
Nigeria Operations – its largest arm, handling production, sales, and distribution across the country.
Pan-Africa Operations – plants and sales subsidiaries in over 9 African countries, exporting Nigerian cement where needed.
This structure helps the company reduce risk by balancing revenue from its home base with income from other fast-growing African markets.
What they sell to make money
The company’s core product is cement, sold in 50kg bags, jumbo bags, or bulk quantities for large projects.
Dangote makes money by producing cement at scale, then selling it to retail distributors, wholesalers, and large construction firms. Cement is a necessity in every construction site, from housing estates to federal highways, which guarantees consistent demand.
Revenue growth drivers despite lower volumes
The company’s revenue grew by 17.70% year-on-year, reaching N2.07 trillion in H1 2025, up from N1.76 trillion in H1 2024. Remarkably, this half-year revenue already accounts for 57.86% of its full-year 2024 revenue (N3.58 trillion), underscoring the strength of its topline performance.
Interestingly, this revenue surge came despite a 4.08% decline in sales volume from 13.93 million tonnes in H1 2024 to 13.37 million tonnes in H1 2025. This suggests that price adjustments and strategic regional demand outweighed volume declines.
This reflects effective pricing strategies and resilient demand across key markets, despite pressure on sales volumes. With H1 2025 revenue already accounting for 54% of FY 2024 turnover, the company is well-positioned to outperform last year’s sales, underscoring its strength in core markets.
The inventory turnover ratio of 1.23x shows that the company sold its stock more than once in six months, translating to about 2.5 times annually a healthy rate for the cement industry. Likewise, a receivables turnover of 14.61x demonstrates Dangote’s strong market leverage and ability to secure quicker customer payments.
Revenue by segment and geographical contribution
Cement and clinker sales remained the company’s lifeblood, contributing 99.99% of total revenue. Other products brought in just N12 million, about 0.001% of overall sales, highlighting the company’s core dependence on cement.
Clinker is an intermediate product in cement production made by heating limestone and other raw materials in kilns at very high temperatures, whereas cement is the final product, made by grinding clinker with gypsum and other additives.
Dangote often exports clinker to other countries or sells it to third parties who grind it into cement. However, there is no separate breakdown for each of these products in the revenue segment.
Breaking down the revenue by geographical dominance, Nigeria accounted for 67.89% (N1.44 trillion) compared to 55.12% (N991.38 billion) in H1 2024, while Pan-African operations contributed 32.11% (N682.12 billion), a decline from the 44.88% (N807.11 billion). The balance was adjusted for eliminations, reinforcing the company’s dual-market strategy: dominance at home, steady growth abroad.
Nigeria contributed the most to the company’s revenue at 67.89% while other African countries altogether contributed 32.11% to the top line (revenue).
Nigeria: 67.89% of revenue (N1.44 trillion).
Pan-Africa: 32.11% (N682.12 billion).
The Pan-Africa countries include – South Africa, Ethiopia, Ghana, Kenya, Zambia, Senegal, Cameroun, Tanzania, Sierra Leone, Liberia, Guinea, D.R. Congo, Cote D’Ivoire, Togo, Zimbabwe, Gabon, Burkina Faso, Chad, Mali, Niger, Madagascar, Benin, Mozambique.
Profit margin pressures eased
Operating profit climbed 47.0% year-on-year to N810.98 billion in H1 2025, up from N551.60 billion in the same period of 2024, while operating margin improved slightly to 39.19% from 31.34%. Pre-tax profit surged 149.2% YoY to N730.03 billion, almost two and a half times the prior year.
The earnings boost was driven by a 17% revenue increase alongside a more efficient cost profile. Cost of sales declined to 41.20% of revenue (N853.56 billion), compared to 47.34% in H1 2024, meaning the company spent less relative to the revenue growth achieved. As a result, gross profit rose to N1.22 trillion, representing a margin of 58.8% and already accounting for 62.95% of full-year 2024 levels.
Profitability was further strengthened by a lower net finance expense. Finance costs dropped to N216.16 billion from N332.52 billion a year earlier, while finance income more than quadrupled to N113.26 billion from N24.79 billion. This resulted in net finance expenses of just N102.91 billion, compared to N307.72 billion in H1 2024. Overall, net income margin expanded sharply to 25.12%, from 10.79% last year, underscoring the company’s improved profitability profile.
Liquidity concerns
Trade and other receivables surged 43.03% to N166.98 billion, indicating a significant rise in payments yet to be converted into cash.
Inventory rose 6.96% to N716.29 billion, reflecting a buildup of stock to support sales.
Cash and cash equivalents fell 14.66% to N383.90 billion, reducing immediate liquidity buffers.
Who else is in the game
In Nigeria, Dangote Cement competes directly with BUA Cement and Lafarge Africa. BUA Cement is its closest challenger locally, but Dangote still commands the biggest share of Nigeria’s cement market.
Globally, it faces pressure from multinational giants like LafargeHolcim and HeidelbergCement.
What makes Dangote Cement stand out is its scale is as it produces more than its rivals combined in Nigeria and has extended operations to countries like Ethiopia, Senegal, and Tanzania.
What this tells us
Here’s what it all boils down to: Dangote Cement is Africa’s cement powerhouse. It dominates Nigeria’s market, enjoys healthy profit margins, and continues to expand across the continent. Rising costs remain a challenge, but its pricing power has shielded it so far.
For investors and observers, the company’s ability to turn 2 trillion naira in 6 months into N730 billion profit highlights just how strong its business model is.
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