By Zuleihat Owuiye, Nigeria

Manufacturing companies listed on the Nigerian Exchange Limited (NGX) are facing growing pressure as the value of their unsold goods climbed to about N1.77 trillion in the first quarter of 2026.

The increase comes amid rising production and operating costs, with the combined cost of sales of the companies reviewed reaching N1.43 trillion during the period.

Financial data show that manufacturers’ inventories rose by 10.6 per cent year-on-year, from N1.597 trillion recorded in the corresponding period of 2025. At the same time, their combined cost of sales increased by 13.7 per cent, rising from N1.261 trillion to N1.434 trillion.

The figures point to a difficult operating environment where manufacturers are holding more products while spending more to produce and distribute them.

The inventory increase was recorded across several areas of the manufacturing sector, including consumer goods, food processing, agriculture, building materials and other related businesses.

However, the reasons for the increase differ from one company to another. While some businesses may be struggling with weak consumer demand, others could be deliberately building up their stocks in anticipation of stronger sales in the coming months.

Dangote Cement recorded the largest inventory among the companies reviewed, with N703.58 billion in the period, compared with N671.55 billion a year earlier. This represents an increase of 4.8 per cent.

UACN recorded one of the biggest increases, as its inventory jumped by 231.8 per cent to N189.55 billion from N57.13 billion.

Okomu Oil Palm’s inventory rose by 90.3 per cent to N39.90 billion, while Livestock Feeds recorded a 35.9 per cent increase to N9.14 billion.

PZ Cussons’ inventory increased by 29.7 per cent to N69.37 billion, while Beta Glass recorded a 28.8 per cent rise to N25.21 billion. Vitafoam’s inventory also increased by 12.3 per cent to N23.20 billion.

Lafarge recorded a 7.3 per cent increase to N110.64 billion, while Presco’s inventory rose by 3.6 per cent to N58.90 billion. International Breweries recorded a smaller 2.2 per cent increase to N95.83 billion.

Northern Nigeria Flour Mills saw its inventory fall by 34.6 per cent to N31.46 billion, while NASCON Allied Industries recorded a 17.1 per cent decline to N14.34 billion.

Cadbury Nigeria’s inventory dropped by 16.9 per cent to N27.14 billion, while Unilever Nigeria recorded a 7.7 per cent decline to N23.42 billion.

Nestlé Nigeria’s inventory fell by 7.3 per cent to N167.84 billion, while Nigerian Breweries recorded a 6.7 per cent decline to N171.92 billion.

This could put further pressure on manufacturers’ profit margins, particularly if companies are unable to transfer the higher costs to consumers through increased prices.

Dangote Cement recorded N448.73 billion in cost of sales, representing a 10.2 per cent increase from N407.27 billion.

Nigerian Breweries’ cost of sales rose by 7.4 per cent to N233.16 billion, while Nestlé Nigeria recorded a 10.8 per cent increase to N194.07 billion.

UACN again recorded one of the sharpest increases, with its cost of sales jumping by 226.8 per cent from N41.75 billion to N136.41 billion.

PZ Cussons recorded a 51.1 per cent increase in cost of sales to N25.04 billion, while Champion Breweries rose by 90 per cent to N8.20 billion.

Not all companies experienced higher costs. NASCON’s cost of sales dropped by 21.1 per cent to N18.89 billion, while Northern Nigeria Flour Mills recorded a 35.9 per cent decline to N5.95 billion.

Okomu Oil Palm also reduced its cost of sales by 24.5 per cent to N11.70 billion, while International Breweries recorded a 9.1 per cent decline to N103.61 billion.

Financial experts said the rising inventories are being driven by a mixture of weak consumer demand, increased production and the high cost of doing business.

The President of the Chartered Institute of Stockbrokers, Fiona Ahimie, said many manufacturers had invested in expanding their production capacity as economic conditions improved and access to foreign exchange became more stable.

According to her, increased production has not been matched by a similar rise in consumer demand.

Although inflation has slowed from previous highs, prices remain expensive compared with household incomes. Many consumers are therefore concentrating on essential goods and cutting back on less important purchases.

Ahimie also noted that some manufacturers could be intentionally holding more stock because they expect demand to improve in the coming months.

She identified electricity, transportation, logistics, raw materials and financing as some of the major factors keeping production costs high.

She urged the government to improve electricity and transportation infrastructure, saying reliable power could significantly reduce the amount manufacturers spend on alternative sources of electricity.

She also called for affordable financing and consistent government policies to encourage investment and improve the competitiveness of local manufacturers.

On the consumer side, she said job creation, stronger household incomes and lower inflation would help improve purchasing power.

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

He said rising energy and distribution costs, together with insecurity affecting sources of raw materials, were adding to the challenges facing manufacturers.

Adonri argued that tackling insecurity and supply constraints would be important before consumer demand can recover strongly.

Meanwhile, Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited, said manufacturers were still dealing with the effects of previous inflation and currency depreciation.

He noted that while inflation had moderated, household purchasing power had not fully recovered, meaning demand remained too weak to absorb production in some sectors.

Amolegbe also pointed to the high interest-rate environment, which continues to make borrowing expensive for businesses and consumers.

He said some manufacturers were maintaining production to protect their market share and meet distribution commitments, even when sales were not growing at the same pace.

He recommended continued investment in electricity, transport and logistics infrastructure, alongside easier access to financing.

He also encouraged greater local sourcing of raw materials and government incentives that could help manufacturers reduce their dependence on imported inputs.

For manufacturers, the challenge is therefore not simply having too many goods in their warehouses. The bigger issue is finding a way to reduce production costs while restoring consumers’ ability to spend.

If inflation continues to ease, purchasing power improves and business operating costs fall, analysts believe manufacturers could gradually sell down their accumulated inventories and improve overall efficiency.