Manufacturers listed on the Nigerian Exchange Limited, NGX, entered the second quarter of 2026 with inventories worth about N1.77 trillion.

The increase in unsold goods came alongside a sharp rise in production and sales costs, highlighting the pressure facing manufacturers and consumers.

Financial Vanguard findings showed that combined inventories rose 10.6 percent year-on-year from N1.597 trillion recorded in the first quarter of 2025.

Over the same period, the companies’ combined cost of sales increased 13.7 percent from N1.261 trillion to N1.434 trillion.

The figures point to a challenging operating environment where manufacturers are holding more stock while spending more to produce and sell their goods.

Inventory increases were recorded across consumer goods, building materials, agriculture, food processing and other manufacturing businesses.

However, the extent of accumulation varied significantly among companies, reflecting differences in production plans, consumer demand, input costs and individual business conditions.

Dangote Cement had the largest inventory among the companies examined. Its inventory stood at N703.58 billion in the first quarter of 2026, compared with N671.55 billion a year earlier.

UACN recorded the largest percentage increase, with inventories jumping 231.8 percent from N57.13 billion to N189.55 billion.

Okomu Oil Palm followed with a 90.3 percent increase to N39.90 billion, while Livestock Feeds rose 35.9 percent to N9.14 billion.

PZ Cussons increased its inventory by 29.7 percent to N69.37 billion, while Beta Glass rose 28.8 percent to N25.21 billion. Vitafoam recorded a 12.3 percent increase to N23.20 billion.

Other increases included Lafarge at 7.3 percent to N110.64 billion, Presco at 3.6 percent to N58.90 billion and International Breweries at 2.2 percent to N95.83 billion.

Some manufacturers, however, recorded lower inventories.

Northern Nigeria Flour Mills declined 34.6 percent to N31.46 billion, while NASCON Allied Industries fell 17.1 percent to N14.34 billion.

Cadbury Nigeria dropped 16.9 percent to N27.14 billion, Unilever Nigeria declined 7.7 percent to N23.42 billion, and Nestlé Nigeria fell 7.3 percent to N167.84 billion.

Nigerian Breweries also recorded a 6.7 percent decline, leaving its inventory at N171.92 billion.

The increase in cost of sales was faster than the growth in inventories, rising 13.7 percent during the period.

Dangote Cement recorded cost of sales of N448.73 billion, representing a 10.2 percent increase from N407.27 billion.

Nigerian Breweries recorded N233.16 billion, while Nestlé Nigeria posted N194.07 billion after increases of 7.4 percent and 10.8 percent respectively.

UACN again recorded the sharpest increase, with cost of sales rising 226.8 percent from N41.75 billion to N136.41 billion.

PZ Cussons recorded a 51.1 percent increase to N25.04 billion, while Champion Breweries rose 90 percent to N8.20 billion.

On the other hand, NASCON reduced its cost of sales by 21.1 percent to N18.89 billion. Northern Nigeria Flour Mills also recorded a 35.9 percent decline to N5.95 billion.

Okomu Oil Palm reduced its cost of sales by 24.5 percent to N11.70 billion, while International Breweries recorded a 9.1 percent decline to N103.61 billion.

President of the Chartered Institute of Stockbrokers, CIS, Fiona Ahimie, attributed the inventory growth to both supply and demand factors.

She said manufacturers had invested in expanding production capacity as operating conditions improved and foreign exchange access became more stable.

However, consumer demand has not increased at the same pace.

According to Ahimie, household purchasing power remains under pressure despite the moderation in inflation. Consumers are prioritising essential goods while reducing spending on discretionary products.

She added that some manufacturers may also be deliberately building inventories in anticipation of stronger demand in coming quarters.

Ahimie said manufacturers continue to face high energy, transportation, logistics, raw material and financing costs.

She urged government to improve electricity and transportation infrastructure, expand access to affordable financing and maintain predictable policies that can support long-term investment.

She also called for measures that would create jobs, improve real incomes and strengthen consumer purchasing power.

David Adonri, Managing Director of Highcap Securities Limited, linked the inventory build-up partly to inflation and weakened consumer purchasing power.

He said rising energy and distribution costs had increased production expenses, while insecurity had affected some domestic sources of raw materials.

Adonri argued that restoring security and addressing supply constraints would be necessary before aggregate demand could expand sustainably.

Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited, said the inventory increase reflected both demand and supply conditions.

He noted that inflation had fallen from its 2024 peak of 33.4 percent to 15.91 percent in June 2026. However, the earlier period of high inflation continues to affect household purchasing power.

Amolegbe also pointed to the Monetary Policy Rate, MPR, which stood at 26.5 percent after the July 22, 2026 Monetary Policy Committee meeting.

He said high borrowing costs continue to constrain consumption, inventory financing and business expansion.

According to him, some manufacturers have maintained production to preserve market share, fulfil distribution commitments and maximise existing production capacity.

But where sales growth fails to match output, inventories inevitably accumulate.

Amolegbe added that some businesses could also be holding additional stock as protection against supply disruptions or future increases in input costs.

He urged government to continue investing in reliable electricity, transportation and logistics while improving access to affordable financing.

He also recommended stronger local sourcing through backward integration and targeted incentives for manufacturers.

On the demand side, Amolegbe said policies that increase employment, productivity and sustainable household incomes would help strengthen consumption.

Improved purchasing power, he noted, would ultimately help manufacturers sell accumulated stock and operate more efficiently.