Consumer goods firms hold N587 billion cash as CBN rate cut threatens deposit income

Nigeria's consumer goods companies held about N587 billion in cash and cash equivalents at the end of June 2026, up from N523 billion a year earlier, a rise of 12.2 per cent. The balances include bank deposits and short term investments that can be turned into cash quickly.

The same nine listed firms earned N31.08 billion in interest in the first half of 2026, against N22.76 billion in H1 2025, an increase of 36.5 per cent. The CBN's cut of its benchmark rate to 23 per cent now threatens that income as deposits mature and are renewed at lower rates.

Where the money sits

International Breweries held N171.08 billion, followed by BUA Foods with N149.52 billion, Unilever with N97.15 billion and Nigerian Breweries with N74.63 billion. Together, the four accounted for about 84 per cent of the nine companies' cash holdings.

Cash represented about 55 per cent of Unilever's assets, compared with 29 per cent at Nascon and 22 per cent at International Breweries. Across all nine, cash was 9.78 per cent of combined assets, up from 9.15 per cent a year earlier.

The review covers BUA Foods, Cadbury Nigeria, Dangote Sugar, Guinness Nigeria, International Breweries, Nascon, Nestlé Nigeria, Nigerian Breweries and Unilever Nigeria. International Breweries, Unilever and Nascon earned a combined N23.82 billion in interest, equal to about N18 for every N100 of combined profit before tax, compared with N15 a year earlier.

Interest carries weaker earnings

International Breweries nearly doubled its cash from N86.64 billion to N171.08 billion, including N115.80 billion in short term investments. Interest income rose from N9.37 billion to N11.96 billion. Revenue barely moved, from N340.99 billion to N342.07 billion, while profit after tax fell from N41.29 billion to N38.31 billion. Finance costs, largely interest on leases, climbed from N3.90 billion to N7.05 billion. Its shares have lost 27.86 per cent this year, yet investors still pay about N40 for every N1 of past year earnings.

Unilever's cash rose from N83.70 billion to N97.15 billion, including N58.71 billion in fixed deposits. Interest income grew from N4.81 billion to N6.51 billion, equal to 22 per cent of pre-tax profit. Revenue climbed from N98.10 billion to N119.92 billion and operating profit from N18.81 billion to N24.36 billion. With past year earnings of N5.80 per share, buyers pay almost N19 for every N1 earned.

At Nascon, cash moved from N36.57 billion to N46.05 billion and interest income from fixed deposits more than doubled, from N2.37 billion to N5.35 billion. Revenue rose from N78.16 billion to N81.16 billion and profit after tax from N15.60 billion to N19.60 billion. Interest income was 18 per cent of pre-tax profit. Interest expenses were just N171.61 million, so cheaper borrowing offers limited relief. A 10 per cent fall in interest income would cut pre-tax profit by about N535 million, all else equal. The shares have gained 75.35 per cent this year, with buyers paying about N14 for every N1 of past year earnings.

BUA Foods grew cash from N40.86 billion to N149.52 billion, including N103 billion in short term investments, but interest income fell from N1.12 billion to N495.69 million. It incurred N6.05 billion in interest expenses, far more than it earned. Revenue dropped 16 per cent, though lower costs lifted profit after tax 12 per cent to N292.27 billion. Its shares are down 4.79 per cent this year, with investors paying about N25 for every N1 of past year earnings.

What it means for the market

Fat cash balances gave these manufacturers room to pay suppliers, buy materials and absorb shocks. With deposit returns set to shrink, profits will depend more on selling and less on the bank. Firms holding large deposits and little debt, such as Unilever, Nascon and International Breweries, have more interest income to lose than borrowing costs to save. Investors pricing these stocks at rich multiples will now watch manufacturing margins, not treasury bills.