Nigeria's leading fast-moving consumer goods (FMCG) companies faced significantly higher production costs in the first quarter of 2026, with increased cost of sales eroding earnings and limiting the benefits of revenue growth. Listed on the Nigerian Exchange Limited (NGX), firms including Nestlé Nigeria, Cadbury Nigeria, Champion Breweries, and Unilever Nigeria reported substantial rises in production expenses due to inflationary pressures, energy costs, and raw material prices.
Nestlé Nigeria
Nestlé Nigeria recorded one of the highest production cost increases, with cost of sales climbing by N18.91 billion (nearly 11%) to N194.07 billion in Q1 2026, compared to N175.16 billion in the same period of 2025. Despite this, stronger sales and improved efficiency allowed the company to absorb the higher costs, resulting in a 44% rise in pre-tax profit to N73.8 billion from N51.2 billion a year earlier.
Unilever Nigeria
Unilever Nigeria saw its cost of sales increase by 15.77% to N32.56 billion from N28.12 billion in Q1 2025. However, the company sustained profitability as revenue growth and better margins lifted gross profit to N26.6 billion from N18.8 billion, while pre-tax profit rose to N13.4 billion from N10.7 billion in the prior-year period.
Cadbury Nigeria
Cadbury Nigeria felt a more pronounced impact. Its cost of sales jumped 15.5% to N28.94 billion from N25.07 billion in Q1 2025, outpacing a 7% revenue increase. Although turnover grew to N39.83 billion from N37.23 billion, higher production and operating costs reduced gross profit to N10.89 billion from N12.15 billion. Consequently, pre-tax profit plummeted 39.2% to N5.2 billion from N8.54 billion, highlighting the pressure of rising costs on earnings.
Champion Breweries
Champion Breweries recorded the steepest increase, with cost of sales surging about 90% to N8.1 billion from N4.3 billion in Q1 2025, reflecting higher production activity and rising expenses. Although sales nearly doubled to N14.3 billion from N8.4 billion, the cost surge and net finance costs of N2.1 billion weakened profitability. Pre-tax profit fell to N839.2 million from N1.7 billion, while profit after tax declined to N881.4 million from N984.5 million a year earlier.
Champion Breweries' share price started the year at N14 but lost 7.14% to close at N13 on June 5, 2026. Shareholders face additional worry as the stock dropped 11% from May 6 to last week.
These results reflect the difficult operating environment for manufacturers, where rising input costs continue to erode margins despite revenue improvements. While larger players like Nestlé and Unilever offset impacts through pricing power, scale, and efficiency, others struggle to balance higher costs with earnings. Operators attribute the performance to lingering inflation, elevated energy and logistics costs, and high raw material sourcing expenses, all increasing the cost of bringing products to market.
