Manufacturers’ unsold stock hits N1.77tn as demand weakens

Manufacturing companies listed on the Nigerian Exchange Limited recorded N1.77tn in unsold inventories in the first quarter of 2026, amid rising production costs and weak consumer demand.

The figure represents a 10.6 per cent increase from N1.597tn recorded in the corresponding period of 2025, with analysts warning that the growing stockpile could further squeeze manufacturers’ margins as the cost of sales rises faster.

An analysis of the Q1 2026 financial results showed that the inventory build-up cut across consumer goods, building materials, agriculture, food processing and other manufacturing-related companies.

The development reflects a combination of increased production, weak demand, higher input costs and company-specific challenges.

Dangote Cement recorded the largest inventory position at N703.58bn in Q1 2026, up 4.8 per cent from N671.55bn recorded in Q1 2025.

UACN recorded one of the sharpest increases, with its inventories rising by 231.8 per cent to N189.55bn from N57.13bn.

Okomu Oil Palm followed with a 90.3 per cent increase to N39.90bn, while Livestock Feeds rose by 35.9 per cent to N9.14bn.

PZ Cussons’ inventory increased by 29.7 per cent to N69.37bn, while Beta Glass recorded a 28.8 per cent rise to N25.21bn.

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

The inventory build-up came as the companies’ cost of sales rose even faster.

Cost of sales increased by 13.7 per cent year-on-year to N1.434tn from N1.261tn.

Analysts warned that sustained increases in production costs and inventories could put pressure on gross margins unless manufacturers either pass higher costs to consumers or improve operational efficiency.

Dangote Cement’s cost of sales rose by 10.2 per cent to N448.73bn.

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

UACN again recorded the biggest increase, with its cost of sales jumping by 226.8 per cent to N136.41bn.

PZ Cussons’ cost of sales increased by 51.1 per cent to N25.04bn, while Champion Breweries recorded a 90 per cent increase to N8.20bn.

The President of the Chartered Institute of Stockbrokers, Fiona Ahimie, said the inventory increase was driven by both supply and demand factors.

“Many manufacturers increased production as operating conditions became more stable and FX access improved,” she said.

However, Ahimie noted that consumer demand had failed to keep pace with increased production because prices remained high compared with household incomes.

“Demand has not expanded at the same pace because prices remain elevated relative to household incomes,” she said.

The Managing Director of Highcap Securities, David Adonri, attributed the development to inflation and declining purchasing power.

Similarly, Olatunde Amolegbe of Arthur Steven Asset Management said restrictive monetary policy was affecting consumption and inventory financing.

He cited the Monetary Policy Rate of 26.5 per cent as a major constraint on consumer spending and businesses seeking funds to finance inventories.

The experts called for urgent measures to improve electricity supply, reduce financing costs and ensure policy consistency.

They also urged the government to introduce measures capable of improving citizens’ real incomes and stimulating demand.

According to the analysts, stronger consumer purchasing power would enable manufacturers to clear accumulated stocks, improve cash flows and ease pressure on their balance sheets.