EFFECT OF COST REDUCTION TECHNIQUES ON THE PROFITABILITY OF MANUFACTURING COMPANIES: A CASE STUDY OF SELECTED COMPANIES IN AKURE

This study investigated the effect of cost reduction techniques on the profitability of selected manufacturing companies in Akure, Nigeria, in response to rising inflation, erratic energy costs, and declining profit margins. The research addressed the gap in the practical application of strategic cost management practices within regional manufacturing contexts, focusing on three firms: TISCO Industry Limited, MATNA Food Company Limited, and Primus Table Water Factory. The study aimed to identify the cost reduction strategies employed, examine their impact on profitability, assess the challenges encountered in implementation, and evaluate their overall effectiveness. A descriptive survey design was adopted, utilizing data from 74 staff members and 242 consumers, selected through stratified and systematic sampling techniques. Data collected was analysed using descriptive statistics, Pearson correlation, and multiple regression via SPSS. The findings revealed that Lean Management and Activity-Based Costing were the most effective techniques, with mean scores of 4.15 and 3.90 respectively. A statistically significant positive relationship was observed between these techniques and profitability indicators such as return on assets and net profit margin. Nonetheless, implementation was often hindered by internal resistance, lack of technical expertise, and financial constraints. The study concluded that when properly implemented, cost reduction techniques contributed meaningfully to financial performance and operational efficiency. It recommends an integrated cost management approach, investment in staff training and infrastructure, and the development of policies to support manufacturing innovation in emerging economies. Keywords: Cost reduction, Profitability, Lean management, Activity-Based Costing, Manufacturing firms, Nigeria, Strategic cost management.