Nigeria’s manufacturing sector continues to grapple with steep operating expenses, as the combined cost of sales for 12 major manufacturing firms surged to ₦2.6 trillion in the first half of 2025, up from ₦2.18 trillion in the same period last year — a 19.68% increase.
Fresh analysis of unaudited half-year financial statements filed with the Nigerian Exchange Limited reveals that inflation, volatile foreign exchange rates, and persistent logistics bottlenecks were the key drivers behind the spike. The review covered companies across food and beverage, cement, consumer goods, and related industries.
Cost of sales — often referred to as the cost of goods sold — represents the direct expenses incurred in producing goods or services, and is a critical metric for assessing a company’s operational efficiency.
Cement and Food Giants Lead Spending
Among the companies surveyed, Dangote Cement Plc posted the highest cost of sales at ₦853.56 billion, a modest 2.43% rise from ₦833.27 billion in H1 2024. This reflects sustained high production volumes despite elevated input costs.
Dangote Sugar Refinery Plc recorded a sharper climb, up 36.38% to ₦378.53 billion, driven by pricier raw materials and supply chain pressures. Nestlé Nigeria Plc followed closely, with costs jumping 27.43% to ₦356.17 billion due to inflation and rising operational expenses.
In the cement space, BUA Cement Plc saw costs rise 15.66% to ₦294.55 billion, while BUA Foods Group experienced one of the steepest hikes, up 38.74% to ₦292.03 billion, reflecting expansion activities and more expensive raw materials.
Beverage producer International Breweries Plc posted a 36.62% increase to ₦219.41 billion, while UAC of Nigeria Plc saw its figure climb 27.28% to ₦82.15 billion.
Steep Increases Across the Board
Cadbury Nigeria Plc’s cost of sales rose 32.36% to ₦55.39 billion, and Nascon Allied Industries Plc recorded a 43.56% jump to ₦40.77 billion. Agro-industrial player Presco Plc posted a milder rise of 13.62% to ₦25.49 billion.
Smaller firms also felt the squeeze: FTN Cocoa Processors Plc reported the sharpest percentage jump — 1,427.52% — climbing from just ₦133 million to ₦2.03 billion, reflecting a low-base effect alongside operational expansion. Champion Breweries Plc saw a 38.48% rise to ₦8.05 billion.
Expert Insights: Exchange Rate, Finance, and Energy Pressures
Commenting on the trend, Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, pointed to the volatile exchange rate as the most significant pressure point for manufacturers.
“Most inputs — machinery, spare parts — are imported, so currency fluctuations directly inflate costs,” Yusuf said.
He also flagged soaring financing costs, with bank interest rates exceeding 30%, as a major burden that compounds both production and operational expenses.
Logistics and energy remain another critical challenge. High diesel prices, poor road infrastructure, and import duties have pushed transportation and distribution costs sharply higher. Yusuf urged manufacturers to pursue backward integration to reduce foreign exchange exposure and to explore alternative energy sources such as solar and gas to curb fuel expenses. He also advised tapping cheaper financing channels, like issuing commercial paper, instead of relying heavily on bank loans.
Inflation’s Broad Impact
Tunde Amolegbe, CEO of Arthur Stevens Asset Management Limited, traced the inflationary wave largely to surging energy costs, which now permeate every aspect of operations — from production and transportation to employee remuneration.
“For most organisations, energy costs have gone up threefold,” Amolegbe noted. “When combined with higher financing costs driven by the naira’s devaluation, companies have little choice but to raise prices, which is why revenue figures are also trending upward.”
Outlook: Efficiency and Local Sourcing as Shields
With cost pressures unlikely to ease soon, industry watchers say operational efficiency, local sourcing, and creative financing will be key for Nigerian manufacturers to protect margins. For now, the sector’s resilience will be tested against a backdrop of stubborn inflation, high interest rates, and persistent infrastructure gaps.