With four major blue-chip companies losing as much as N51.86 billion in the first half of 2016, the lot of the manufacturing sector is getting bleaker. This is just as the firms continue to grapple with input cost pressure and weak consumer purchasing power, while earnings outlook for the second half of 2016 is dim.
Indeed, companies like Nestlé Nigeria Plc, Nigerian Breweries Plc, Dangote Cement Plc, and Lafarge Africa, in the first half of the year, suffered combined profit losses to the tune of N51.86 billion, while there are indications that other unlisted equities may have incurred more losses during the period.
A review of unaudited financial reports of many of the firms for the first half of 2016 revealed a struggle between balancing rising input cost pressures and passing the inflationary pressures on already constrained consumers by raising prices of some products during the period.
Some of the input cost pressures being encountered by many manufacturers border on foreign exchange losses on dollar loans, the inability to access foreign exchange, the high cost of production as well as poor electricity supply and tariff hike. Others are prolonged gas supply shortages across Nigeria, which forced companies to rely on the more expensive backup – low pour fuel oil (LPFO), monetary policies and constrained consumer purchasing power…Read more