BUSINESS DAY
Ten consumer goods firms in Nigeria incurred a combined foreign exchange loss of N987.7 billion last year on the back of naira devaluation, according to data compiled by BusinessDay.
The firms are Cadbury Nigeria Plc, Nigerian Breweries Plc, Nestle Plc, Dangote Sugar Refinery Plc, International Breweries Plc, PZ Cussons Nigeria Plc, Guinness Nigeria Plc, Dangote Cement Plc, BUA Cement Plc, Lafarge Africa Plc.
The FX loss recorded by the firms in 2023 rose more than sevenfold compared to the previous year when nine of them lost around N129.8 billion. Cadbury recorded no FX gain or loss in 2022.
The FX loss figures for two of the firms, PZ Cussons and Guinness, are for a six-month period that ended November and December respectively.
PZ Cussons reported an FX loss of N87.1 billion for the six months ended November, up from N2.7 billion in the same period of 2022.
Guinness had a loss of N15.7 billion for the six months ended December, up from N4.53 billion in the same period of 2022.
“The devaluation was massive as we moved from about N450/$ at the official rate to almost N1,600/$,” Muda Yusuf, chief executive officer of the Centre for Promotion of Private Enterprises, said.
He said most of the consumer firms have exposure in terms of their foreign liabilities that they used to get their raw materials, facilities or all sorts of things from their parent companies.
Israel Odubola, a Lagos-based research economist, said: “The FX loss widening is due to the effect of the naira depreciation. These companies had foreign currency-denominated obligations in their books.”
He added that with the massive depreciation of the naira, which was over 40 percent in 2023, the naira equivalent of their foreign currency-denominated obligations widened.
“I also noticed that some of these companies made losses not because revenue fell but because of the significant escalation of their finance costs in their books.”
Further findings from the firms’ financial statements shows that Cadbury, Nigerian Breweries, Nestle, International Breweries and Dangote Sugar posted a combined after-tax loss of N346.7 billion last year.
In 2022, Cadbury, Nigerian Breweries, Nestle and Dangote Sugar had after-tax profit of N117.4 billion while International Breweries posted a loss of N21.6 billion.
PZ Cussons reported an after-tax loss of N74.1 billion compared to a profit of N7.67 billion, while Guinness recorded a loss of N5.23 billion as against a profit of N4.02 billion.
BUA Cement recorded a profit of N69.45 billion, down from N101.0 billion. Lafarge Cement’s profit fell to N51.1 billion from N53.7 billion. Dangote Cement however recorded an increase in profit to N455.6 billion from N382.3 billion.
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