Six prominent consumer goods companies listed on the Nigerian Exchange (NGX) Limited faced a collective net loss of N179.561 billion during the first half (H1) of 2023, primarily attributed to the impact of foreign exchange devaluation.....KINDLY READ THE FULL STORY HERE▶
The companies affected include Guinness Nigeria, International Breweries, Nigerian Breweries, Nestle Nigeria, Cadbury Nigeria, and Dangote Sugar Refinery.
Their financial reports indicate that the losses were driven by significant unrealized foreign exchange losses and higher net finance costs….CONTINUE READING
The devaluation of the naira has had substantial repercussions on the operations of multinational corporations operating in Nigeria.
This depreciation resulted in increased operating costs for companies whose major expenses, including finance costs, are denominated in foreign currencies.
The Central Bank of Nigeria’s announcement on 14 June 2023, regarding changes in Nigerian forex operations, had a drastic impact on the market.
The new measures required the consolidation of all market segments into the investor and exporter (I&E) window and reintroduced the ‘willing buyer, willing seller’ model.
Consequently, the exchange rate experienced a significant 60 per cent movement since the announcement, reaching N756.24/US$ by the end of June 2023 as the market sought equilibrium.
During H1 2023, Guinness Nigeria recorded a loss after tax of N18.168 billion, while International Breweries and Nigerian Breweries posted net losses of N21.287 billion and N47.599 billion, respectively.
Similarly, Nestle Nigeria, Cadbury Nigeria, and Dangote Sugar Refinery declared losses of N49.981 billion, N14.539 billion, and N27.987 billion in H1 2023.
Financial analysts observed that “the negative impacts of a weaker currency and stubbornly-high inflation worsened during the first half of 2023. The naira devaluation at the I&E window, following the monetary policy reforms, led to higher costs of imported raw materials and significant foreign exchange losses.”
They also noted that while most consumers might be insulated from the depreciation’s direct impact (as they mostly access foreign exchange at the parallel market), the combined effect of subsidy removal and potential increases in electricity tariffs suggests that discretionary income could weaken.
