INDICATIONS have emerged that more multinational corporations and indigenous companies operating in the country risk more Foreign Exchange losses as exchange rate woes continue to pose a challenge to their operations.

From June last year to March 1, 2024, the average exchange rate at the Nigeria Autonomous Foreign Exchange Market, NAFEM, surged by about 144 %, from an average rate of N634.56/$ in June 2023 to N1,548.25/$ in March.

The same applies to the parallel market otherwise known as a black market where the exchange rate per dollar as of March 1, 2024, stood at N1,600.00/$.

Analysts and economy experts have said the effects of the forex losses include job loss, reduction in company income tax earnings by the government, absence of dividend payment for shareholders and closure of plants that may result in further exit of multinationals.

According to analysts, the devaluation of the naira coupled with rising interest rates, led to increased operating costs for multinationals, whose major costs including finance costs are denominated in foreign currencies.

The Central Bank of Nigeria, CBN, increased the Monetary Policy Rate MPR, also known as its benchmark interest rate, for the eighth consecutive time in July. At the last Monetary Policy Meeting, MPC, held February 27 and 28, the CBN further raised the interest rate to 22.75%.

When finance costs skyrocket significantly, it can erode all the significant profit companies make such that in terms of net profits, they are making losses.


Recall that on June 14, 2023, the CBN merged all segments of the foreign exchange market into the Investors and Exporters window, and reintroduced the ‘willing buyer, willing seller’ model. The naira has continued to depreciate against the dollar and other major foreign currencies ever since.

Findings by Sunday Vanguard revealed that seven big firms operating in the country have suffered severe losses in their operations for the financial year ended December 31, 2023, owing majorly to ravaging forex losses, high production and operating costs among others.

A review of companies that have released their full-year 2023 financial results showed that they incurred whopping forex losses of about N1.24 trillion, leading to poor performance as they recorded loss before tax of about N415.43 billion.

The companies include Nestle Nigeria Plc, N195 billion, Nigeria Breweries, N153 billion, BUA Cement N69.95 billion, Lafarge Africa N21 billion, Guinness Nigeria, N49.1 billion, MTN, N740 billion and Cadbury Nigeria, N13.5 billion.

Details of performance


Lafarge Africa : The Company announced its full year 2023 results, saying its profits were impacted by significant FX loss.
Full-year 2023 profit before tax, PBT, went up by 15.7 percent Year on Year, YoY, despite N21 billion FX losses in 2023.

FY 2023 net sales rose to 8.6 percent year-on-year.

Lafarge Africa noted that a higher effective tax rate in 2023 ,after expiry of Pioneer Status Incentive in 2022, coupled with pressures from FX losses led to a PAT decline of 4.7 percent YoY.

Lolu Alade-Akinyemi, CEO of Lafarge Africa, said: “The fundamentals of our business remain strong. Despite extremely challenging macroeconomic headwinds, we grew the top line by 8.6 percent and improved Operating Margin from 22.6 percent to 25.3 percent in FY 2023.”

BUA Cement: The Company reported a profit after tax of N69.45 billion for the financial year ended December 2023, representing a 31.2% decline YoY.


The YoY reduction in profits was largely due to a foreign exchange loss of N69.95 billion—an increase from N5.50 billion recorded in 2022.

Like most manufacturing companies in Nigeria, BUA Cement experienced profit decline as a result of the impact of the naira depreciation following the reunification of the exchange rate announced mid-last year.

Guinness Nigeria: The company’s foreign exchange expenses eroded the operating profit of Guinness Nigeria Plc for the year ended December 2023, resulting in N5.233billion loss.

Reacting to the performance, former Managing Director, John Musunga, blamed the forex harmonisation policy.
“In this situation, our retained earnings declined quite a bit because we had to service that change in FX and our profit and loss position also became adverse as we recorded N18billion in losses. Good practice says that if you don’t have retained earnings or declare a loss, you don’t pay dividends,” Musungu said.

MTN Nigeria: It recorded a forex loss of N740 billion for the financial year 2023, according to its report released on the Nigeria Exchange Limited, NGX on Friday.


Consequently, the forex losses impacted negatively on its performance as it posted a loss before tax of N177.8 billion compared to a pre-tax profit of N518.8billion in the previous year.

The company’s audited results for the year ended 31 December 2023, showed a loss after tax amounting to N137billion. This sharp contrast was evident compared to the restated Profit After Tax (PAT) of N348.7 billion reported in 2022.
MTN stated that the repercussions of this financial decline extended to negative retained earnings and shareholders’ equity, reported at N208 billion and N40.8billion respectively, as of December 2023.

Nestle Nigeria: The company reported a loss before tax of N104 billion for the year ended 2023 compared to a profit before tax of N71 billion same period in 2022.

This is according to the 2023 financial statement of the company published on the NGX on Wednesday, 28th February 2024.

It reported a foreign exchange loss of N195 billion which was the major reason for the overall loss reported by the company.

https://www.vanguardngr.com/2024/03/fx-woes-blue-chip-firms-struggle-as-nestle-nbl-mtn-guinness-others-lose-n1-24-trillion/

But they told us that Tinubu's reforms is paying off. Ebola Tinubu is hell bent on destroying Nigeria beyond redemption.

Lol

I predicted this that the Lagos economic bubble has bursted last year and I was called a Lagos hater.


For those who don't know yet, Lagos is gone, finished and now extinct.

Dem don start to dey foam for mouth. . In business, it's a reality that its never 100% gains. There are times that you lose. That's the reality. When the were making so much from gullible Nigerians they didn't make noise. From the gains by this companies what value have they really added to the society.

Arobaga:



Nairaland mods will ban you oo




They hate any truth against their Tinubu oo




And yet Seun preaches unity and equality

My life doesn't start and end in nairaland. Ban no dey fear a patriot like me. I no fear Abacha na Seun I go fear!

Zxcvbnmghtr:

This Lagos obsession is truly a mental disorder o.

I withdraw my statement but let's watch and see, most companies are in red with no plans of bouncing back except with bailout.

Mtn might go the way of 9mobile, Cadbury, international breweries, mtn Nigeria made so much loss that it will take divine act to bounce back in 4 years.
.there is no forex, diesel is at 1700 and there is no power. Deindustrialization of Nigeria has happened to lagos and now cost of borrowing is now very high

Arobaga:



You don wake up ON data OFF sense




Nonsense

😂 Lol

Arobaga:



Abacha got me laughing




🤣🤣🤣🤣🤣

Allow me eat Remi Tinubu jollof rice first

When they were making profit, how did it benefit us?.. Let them kip kwayet abeg

Where will people work, if all these blue chips close shops Mynd44?

babyfaceafrica:
When they were making profit, how did it benefit us?.. Let them kip kwayet abeg

CSR,giving back to society.

When you just wake up and devalue naira, everyone must be hit, especially those whom have cash in the bank, your 1m is devalued to 400k, only traders with goods in stock were less hit, off course Peter obi leaked it to his brothers mid to ending 2023of the pending crisis ahead , and the all flew out , even some got loans from banks to import goods and stocked there wharehoux, the message was passed to some through there Sunday town meetings in the whole 36states, today they re not complaining like other people, Nigerians and a lot of companies re suffering from the ego and insensitivity of tinubu

iwaeda:

CSR,giving back to society.

He no reach my side

babyfaceafrica:


He no reach my side

Be closer to them.

Arobaga:



You don wake up ON data OFF sense



Show me one company that has made gains ever this your urine dispensing president came in



The only people gaining in this economy are casket manufacturers



Even Tinubu boys no see money buy cocaine

banks, BUA, VITAFOAM , INSURANCE COMPANIES, N ASCON, NAHCO, CUTIX, LAFARGE, UAE ETC

AllTheWayUp:

Na Statistics we go Chop??
Tinubu is a monumental disaster and failure

Seunmsg will not agree.

Nlfpmod, Nigeria is going down under Tinubu, APC. If all the people leave, unemployment will RISE. How will our forex flow.

Baba fergie001 sighted you in the morning.

We are still asking why ebi npawon.