September 20, (THEWILL) – Nigeria’s manufacturers are facing a rising logistics cost burden, with H1 2026 financial statements showing selling, distribution, haulage and freight expenses growing sharply across major listed companies.
At Dangote Cement, selling and distribution expenses rose to N401.85bn from N321.39bn, an increase of 25 percent, while haulage costs climbed 25.6 percent to N318.60bn from N253.64bn.
Revenue, however, grew at a slower pace, rising 21.3 percent to N2.51tn from N2.07tn.
Haulage accounted for about 79 percent of Dangote Cement’s selling and distribution expenses, underscoring the scale of transportation costs in the company’s operations.
The pressure was also evident at Nestlé Nigeria, where marketing and distribution expenses increased 26.9 percent to N93.55bn from N73.68bn. Freight expenses rose even faster, climbing 37.5 percent to N31.58bn from N22.98bn.
Storage costs provided some relief, falling to N7.49bn from N10.34bn.
At Nigerian Breweries, selling and distribution expenses rose 22.1 percent to N159.62bn from N130.67bn, while distribution costs increased 25.7 percent to N68.04bn from N54.11bn.
Revenue grew by just 8.9 percent to N803.68bn from N738.14bn. The gap is significant. Nigerian Breweries added about N65.5bn to revenue, while selling and distribution expenses increased by almost N29bn.
International Breweries recorded a similar cost trend. Advertising, promotion and distribution expenses increased 20.7 percent to N42.56bn, while revenue remained broadly flat at about N342bn.
The numbers point to a common pressure across manufacturers: getting raw materials into factories and finished products to consumers is becoming an increasingly significant cost line.
Road transport remains central to that equation. The Chartered Institute of Logistics and Transport has estimated that more than 90 percent of Nigeria’s freight and passenger movement is by road, leaving manufacturers heavily exposed to road conditions, congestion, fuel costs, vehicle maintenance and longer delivery times.
Poor roads are therefore one component of a wider logistics-cost problem.
For manufacturers, the impact extends beyond the transportation bill. Higher logistics expenses can raise the cost of goods sold, compress margins or force companies to increase selling prices.
But H1 results also show that higher logistics costs do not automatically translate into weaker earnings.
Dangote Cement’s profit before tax rose 34.4 percent to N981.39bn, ahead of its 21.3 percent revenue growth. Nigerian Breweries’ profit before tax also increased 18.2 percent to N156.33bn.
This suggests that companies can absorb part of the cost pressure where pricing, volumes, productivity or other cost savings provide a counterweight.
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BUA Foods offers a different picture.
The company’s H1 revenue declined 16.2 percent to N765.12bn from N912.51bn, while selling and distribution expenses fell 14.6 percent to N30.44bn from N35.63bn. The company attributed the reduction partly to lower logistics expenses.
It’s cost of sales dropped 30 percent to N401.89bn, while gross profit increased 7 percent to N363.23bn. EBITDA rose 12 percent to N325.45bn and profit after tax increased 12 percent to N292.27bn.
The contrast highlights the importance of logistics efficiency. Lower logistics costs can provide room to protect margins even when revenue growth is weak.
The broader cost implications are substantial. The Nigerian Investment Promotion Commission has previously put logistics costs in some sectors at between 40 percent and 60 percent of production costs, compared with a global benchmark of about 15 percent to 20 percent.
Manufacturers’ groups have also consistently identified inadequate roads and other infrastructure gaps as constraints on production and distribution.
For companies operating large distribution networks, the cost is not limited to the amount paid to transporters. Poor road conditions can increase vehicle maintenance and fuel consumption, extend delivery times and increase the number of trips required to move products.
These costs ultimately enter the price and margin equation.
The Federal Government’s industrial policy has targeted a reduction in trade costs through improvements in roads, logistics and related infrastructure. For manufacturers, the significance is less about infrastructure spending itself and more about whether such improvements translate into lower movement costs.
With H1 results showing distribution and freight expenses rising faster than revenue at several major manufacturers, H2 performance will provide a clearer indication of how much of the burden companies can continue to absorb.
If logistics costs remain elevated, manufacturers will have to balance three competing pressures: protecting margins, maintaining production and keeping products affordable.
For an industry already contending with high energy, financing and input costs, the road from factory to market is becoming an increasingly important part of the cost equation.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
