Nigerian companies brave diesel and forex scarcity to post record profits in Q1 2022

As inflation bites, some of Nigeria’s largest companies represented on the Nigerian Stock Exchange are raking in profits like never seen before.

Data from Nairalytics research shows the COMART Group made up of bluechip Nigerian companies in Construction, Oil & Gas, Manufacturing (including FMCGs), Agriculture, Real Estate and Technology respectively raked in over N2.3 trillion in revenues in the first quarter of this year alone. This data excludes banks and other non-bank financial institutions. Nairametrics based its analysis on the calendar year.

The jump in revenues represents a 30% increase year on year as businesses adjust to higher inflation and forex challenges in the first quarter of the year. The data suggest a huge contrast to the experience of ordinary Nigerians, who have had to deal with the rising cost of goods and services and a dent in their purchasing power.

What the data shows

The top firms reported revenue of N2.348 trillion in Q1 2022 as against N1.8 trillion in Q1’2021 accounting for a growth of 30% or N548.8 billion. All the companies in our except two recorded year-on-year growth in revenues.

  • Apart from revenues, the companies also recorded a significant growth in their operating profit margins for the period under review suggesting their ability to still make money despite the higher operating cost. The cost of sales for the companies under our review rose from N1.06 trillion to about N1.3 trillion representing a 25% hike in cost far ahead of an inflation rate of about 15%.
  • Cost of sales includes the direct cost of sourcing raw material inputs, direct labour cost, clearing, and forwarding among others. Some of the cost increases were also due to imported inflation and the impact of forex scarcity. Local substitutes are also slightly more expensive forcing the COMART to include more cost of sales
  • Other operating expenses such as marketing and administrative expenses also rose a whopping 44% to N205 billion reflecting higher energy prices, exchange rates pass through, and employee costs. Nigeria has experienced a rise in diesel prices, and scarcity of fuel affecting business operations across the country. 
  • Finance costs also rose in the period under review as the companies took on more loans whilst also experiencing slight increases in their borrowing cost. In the first quarter of the year, finance costs rose to N115.7 representing a 17.7% increase year on year.
  • Despite the increase in direct costs, operating expenses, and finance costs, COMART still ended up reporting higher operating profit margins (without including non-core income). Profit margins recorded are 29.3% compared to 27.3% recorded same time in 2021.


The double-digit rise in revenue and operating margins when impacted by inflation also shows the companies were still able to grow top and bottom lines correlating with Nigeria’s GDP growth numbers. For example, the manufacturing sector grew by 5.89% in the first quarter of the year, while the agric sector grew by 3.16%. The real estate and telecom sectors also recorded impressive growth numbers.

Impact of Exchange rate

As expected, a rise in revenue and operating profit margin will likely be affected when adjusted for currency depreciation.

  • The black market exchange rate at the end of March last year was about N480/$1 compared to about N580/$1 at the end of March this year.
  • When adjusted for the impact of the exchange rate, COMART still performs better in 2022 relative to 2021 on all critical benchmarks.
  • Assuming black market exchange rate of N460/$1 as of March 2021 compared to N580/$ same period this year, revenues are up 3.5% to $4 billion and up 11% to over a billion dollars combined.
  • Thus whilst, the companies suffered capital erosion due to currency depreciation, they performed better in the first quarter of 2022 compared to 2021.

What is driving this growth? 

Our initial prognosis suggests the improved performance from the companies points to the ability of the companies to increase prices and still record higher volume sales.

Commenting on the corporate performance in Q1’22 in relation to the economy, analyst and Vice Executive Chairman, HighCap Securities Limited, David Adonri, said:

  • Some of the growths in earnings by listed companies were inflation aided due to increase in prices of their products. Many of the companies also undertook cost-saving measures.  
  • With the opening up of the global economy and restoration of the global supply chain, and increasing demand, business activities are surging, leading to increased production and corporate earnings. However, despite the improving corporate performance, because factors that fuel inflation and influence GDP are more encompassing, these macroeconomic indicators may still lag behind corporates. 

Nigeria is also a very large market and it will seem that the huge population also helps businesses with highly inelastic goods to still sell despite higher volumes and forward price adjustments.

Note: The article excludes Ardova’s first quarter 2022 result which was yet to be released when the article was published. However, we do not expect any material impact on the final conclusion of this article. 

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