New Telegraph

Consumer good stocks gain N71bn in 2 months

Investors in consumer goods’ sector quoted on the main board of the nation’s stock market gained about N71 billion in the last two months of 2021 (September and October) following positive sentiments witnessed by the local bourse. The market sentiment of the sector, which comprises segments such as automobiles/ auto parts, beverages, food products, household durables and personal/ household products, among others, has sustained positive sentiment following improved corporate earnings and ease of COVD-19 pandemic lockdown.

Checks by New Telegraph revealed that the sub-sector gained N71 billion or 3.13 per cent to close at N2.336 trillion in market capitalisation on October 31, in contrast to opening figure of N2.265 trillion at the beginning of trading on September 1.

The lockdowns had pushed some consumer product segments to the fore, especially those seen as essential, such as the packaged foods and home care segments. While the stockpiling and stocking up seen during the initial days of the lockdown have subsided, these segments will continue to benefit from the general shift to in-home consumption. According to analysts at Cordros Capital, the Nigerian consumer wallet remains pressured by higher commodity prices, weak labour market conditions and sub-inflationary wage adjustments. In addition, the higher cost of production has continued to weigh on profitability for industry players due to currency devaluation, FX illiquidity, and mild infrastructural development.

They noted that consumer income faced intensified pressure due to the lingering effect of the pandemic, hike in food prices, increase in the price of PMS, and weak economic growth. “As a result, the purchasing power of consumers was severely dented. On the other hand, Industry players were exposed to high operating costs due to FX illiquidity, high energy costs and currency depreciation. “As a result, prices of products increased significantly across the sector, especially in the food staples segment as producers shifted the costs to the final consumers.

Consequently, consumers became increasingly price-sensitive, shifting their consumption pattern towards food and essential products and downtrading towards more affordable substitutes for home and personal care products,” they said.

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