Proofs FMCGs’ fully passed on production cost to customers to maximize profits

Proofs FMCGs’ passed on production cost to customers to maximize profits


Just recently Nigerian consumer goods companies reported a surge in revenues despite the precarious business environment in year 2022.

Nairametrics analyzed the 2022FY financial results of six (6) fast-moving consumer goods (FMCG) companies in the consumer goods sector to ascertain the impact of the economic shocks on their performance. The companies are BUA Foods, Cadbury, Dangote Sugar Refinery, Nascon, Nestle, and Unilever.

The findings show that amid the very challenging macroeconomic headwinds characterised by rising interest rates, inflation, energy prices, and weakened consumer purchasing power, these FMCGs firms generated revenue of N1.470 trillion in 2022, 32.9% up from N1.107 trillion earned in 2021.

Take a look:

             On costs of sales, the combined costs of sales of the companies under study rose by N31.08% on-year to N1.027 trillion in the 2022 FY, driven more by NASCON’s 61% growth in the cost of sales.

             In terms of operating expenses (OPEX), the combined OPEX of the companies printed at N159.40 billion in 2022FY from N130.944 billion recorded in 2021, representing 21.74% growth. Dangote Sugar recorded the lowest growth as its OPEX declined by 4.21%.

             Also, the combined operating profit growth of the companies rose by 54.07% year-on-year to N303.236 billion with Unilever recording the highest operating profit growth of 568%.

Going by their revenue and earnings growth juxtaposed with consumer declining purchasing power, which restricted effective demand, the coverage companies must have transferred much more than their costs to the consumers, though most of them did well in managing their costs given the impressive performance in their operating profit growth rate.