NGX 12 Firms' Cost Base Hits N10.14tn, Up 16.9% in H1 2026

For equity and credit investors in Nigerian large caps, the H1 2026 cost structure is the signal to watch: aggregate cost of sales and OPEX rose 16.9% to N10.14tn—above the 15.91% inflation rate—while the naira's gain should have eased imported input pressure. The mix suggests that power, logistics, and supply-chain costs are now a bigger determinant of margins than FX alone. With profit before tax at N4.95tn, up from N2.84tn, the market must decide whether this is pass-through pricing or genuine operating leverage.

Nigeria’s listed corporate sector is absorbing a pronounced operating-cost shock, according to analysis of unaudited first-half 2026 results. Across 12 companies on the Nigerian Exchange Limited (NGX), combined cost of sales and operating expenses reached N10.14 trillion in H1 2026, up 16.9 percent from N8.67 trillion in H1 2025. The increase covers a cost base that split into N7.67 trillion of cost of sales and N2.47 trillion of operating expenditure, compared with N6.6 trillion and N2.2 trillion respectively in the prior-year period. The reported cost escalation is significant because it exceeds the official inflation benchmark: the National Bureau of Statistics put June 2026 inflation at 15.91 percent.

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The analysis identifies Oando Plc as the largest cost center at N1.96 trillion, followed by Seplat Energy Plc, Dangote Cement Plc and MTN Nigeria Communications Plc.

Equally notable is the currency context. The naira closed H1 2026 at about N1,380 against the dollar, a marked strengthening from N1,530 on June 30 2025. Normally, a firmer naira should reduce imported input costs for manufacturers and telecom operators that buy equipment and raw materials abroad. That the aggregate cost base still grew faster than headline inflation despite the naira’s appreciation points to domestic and structural cost drivers—power, transportation, materials and supply-chain logistics—rather than pure FX translation. It also suggests that companies are not fully converting the naira’s strength into lower unit costs, possibly because of contracted supplier pricing, energy tariff increases and persistent bottlenecks.

Profit before tax nevertheless closed at N4.95 trillion for the 12 companies, up from N2.84 trillion in H1 2025. On first inspection this looks like a strong result: revenue growth more than offset the additional N1.47 trillion in combined cost of sales and OPEX. But sector mix matters. The analysis identifies Oando Plc as the largest cost center at N1.96 trillion, followed by Seplat Energy Plc, Dangote Cement Plc and MTN Nigeria Communications Plc. These four are heavyweights in energy, cement and telecommunications, and each has its own exposure to fuel, gas, logistics and foreign-currency-linked inputs. For investors, the concentration of cost pressure in these names raises earnings-quality questions even when headline profit before tax rises.

Geopolitical factors are also visible in the data. The report links prolonged Russia-Ukraine hostilities and the USA-Israel-Iran conflict to global supply chain strain and higher raw material costs, particularly wheat, since both Russia and Ukraine rank among the top 10 wheat producers. That hits Nigerian food and beverage manufacturers and consumer goods companies through the cost of sales line. Domestic pressures compound the problem: high electricity costs, transport expenses and materials inflation are pushing OPEX higher across the sample. These are not one-off write-downs; they are recurring operating costs that will continue to affect margins in the second half of 2026 if the drivers persist.