VANGUARD
Many of Nigeria’s big companies across various sectors of the economy may be gasping for breath following the sustained scarcity of foreign exchange (forex) resources.
This also comes at the backdrop of a sharp rise in exchange rate in the later part of second quarter 2023, Q2’23.
The companies had taken forex loans for imported raw materials and other operational inputs earlier before the recent forex depreciation.
Consequently, the companies are now recording massive losses arising from revaluation of their forex related operations.
Financial Vanguard findings from the recent reports filed by some quoted companies in the Nigerian Exchange Limited, NGX, indicated that about 20 of them recorded an all time high of N656.1 billion forex losses in the first half of 2023, H1’23.
This figure represents a quantum surge of 709.3% over N81.1billion billion the companies recorded in the corresponding period of 2022, H1’22.
But some industry observers noted that the losses were not restricted to the 20 firms adding that all-sector aggregate losses could amount to over three trillion Naira in H1’23 alone.
The reports of the 20 leading firms showed that most of their profits and retained earnings for the period under review were affected significantly as some of them recorded outright losses.
The 20 companies monitored by Financial Vanguard are: MTN Nigeria, Nigerian Breweries, Dangote Cement, Lafarge Africa, Guinness Nigeria, GSK, Beta Glass, Unilever Nigeria, Seplat Petroleum, Dangote Sugar and Julius Berger.
Others include: Total Energies, MRS Oil, ETERNA Oil, Nestle, Cadbury, NASCON Allied Industries, Transnational Corporation and Notore Chemical Industries.
However, analysts believe these companies will recover most of the losses through upward pricing of their products and services in the second half of this year, H2’23.
Companies’ details
Meanwhile, leading the pack of forex losses is MTN Nigeria, with N131.1 billion as against N13.6 billion it recorded in HI’22. It was followed by Nestle Nigeria which recorded N123.7 billion as against N4.8billion in HI’22. The company had become accustomed to posting profits on its financials.
However, in its H1’23 financial report, Nestle recorded a pre-tax loss of N86.5billion, which indicated that the forex loss of N123.7billion actually eroded what would have been a N37 billion profit.
With retained earnings of N49billion, the company faces an uphill battle of paying shareholders’ dividends this year.
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