Nigeria’s leading fast-moving consumer goods (FMCG) companies spent more on production in the first quarter of 2026, with higher costs of sales eating into earnings and limiting the benefits of revenue growth.

The firms listed on the Nigerian Exchange Limited (NGX), including Nestlé Nigeria, Cadbury Nigeria, Champion Breweries and Unilever Nigeria, recorded significant increases in production costs as inflationary pressures, energy expenses and raw material costs continued to weigh on operations.

A breakdown of the firms’ performance showed that Nestlé Nigeria recorded one of the highest production costs, with cost of sales rising by N18.91 billion, or almost 11 per cent, to N194.07 billion in Q1 from N175.16 billion in the corresponding period of 2025.

Despite the increase, the company was able to absorb the higher costs through stronger sales and improved efficiency, resulting in a 44 per cent increase in pre-tax profit to N73.8 billion from N51.2 billion a year earlier.

Similarly, Unilever Nigeria’s cost of sales rose by 15.77 per cent to N32.56 billion from N28.12 billion in Q1 2025. Nevertheless, the company sustained profitability as revenue growth and improved margins lifted gross profit to N26.6 billion from N18.8 billion, while pre-tax profit increased to N13.4 billion from N10.7 billion in the corresponding period of last year.

For Cadbury Nigeria, however, the impact of rising production costs was more pronounced. The company’s cost of sales increased by 15.5 per cent to N28.94 billion from N25.07 billion in Q1 2025, outpacing its seven per cent revenue growth.

Although its turnover rose to N39.83 billion from N37.23 billion, the higher production and operating costs reduced gross profit to N10.89 billion from N12.15 billion posted in the 2025 corresponding period.

Consequently, Cadbury’s pre-tax profit declined sharply by 39.2 per cent to N5.2 billion from N8.54 billion recorded in the corresponding period of 2025, highlighting the pressure rising costs continue to exert on its earnings.

Champion Breweries recorded the steepest increase in production costs among the firms reviewed. Its cost of sales surged by about 90 per cent to N8.1 billion from N4.3 billion in Q1 2025, reflecting higher production activity and rising operating expenses.

Although the brewer’s sales nearly doubled to N14.3 billion from N8.4 billion recorded in the previous year, the increase in production costs, coupled with net finance costs of N2.1 billion, weakened profitability. As a result, pre-tax profit fell to N839.2 million from N1.7 billion, while profit after tax (PAT) declined to N881.4 million from N984.5 million recorded a year earlier.

A look at the share price on the exchange showed that Champion Breweries began the year with a share price of N14; it has so far lost 7.14 per cent to close trading on Friday, June 5, 2026, at N13.

Shareholders’ worries are compounded by the fact that the firm has lost 11 per cent of the stock’s value from May 6th till last week.

The results are an indication of the difficult operating environment facing manufacturers, as rising input costs continue to erode margins despite improvements in revenue.

While larger players such as Nestlé Nigeria and Unilever Nigeria have been able to offset the impact through stronger pricing power, scale and operational efficiency, others continue to struggle to offset higher sales costs with stronger earnings.

According to operators, the performance reflects the lingering impact of inflation, elevated energy costs, logistics expenses and high cost of sourcing raw materials, which have increased the cost of bringing products to market.