Dangote Group Finances Take a Hit as Three Subsidiaries Report N423 Billion FX Losses

• The foreign exchange crisis has been taking a toll on different companies, and has now also affected the Dangote group
• Three of its listed subsidiaries reported major FX losses in the 2024 financial year despite all the strategies to moderate it
• Industry experts are now recommending that companies apply more strategies to hedge against future FX losses

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

It is a major financial crisis for the Dangote group as three of its listed subsidiaries have reported combined foreign exchange losses amounting to N423 billion.

This figure was revealed in the 2024 financial report of the Dangote Cement, Dangote Sugar Refinery, and NASCON Allied industries.

The N423 billion loss recorded, marks a 261.8% increase from the N117 billion losses in 2023, providing a clearer picture of how Nigerian companies have to bear the financial brunt of the naira fall, and rising costs of imports.

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Nigeria's FX crisis hits businesses

The FX crisis started in 2023, taking a major swipe at manufacturers and FMCG firms. The naira has depreciated more than 300% since then, moving from about N420 to a current range of N1,500 to N1,600.

In 2024, the exchange rate went as low as N1,800 to exchange for a dollar, wiping out shareholders’ funds in many companies, and pushing several others into financial distress.

Dangote group had previously suffered a sustainable level of losses, but the steep naira depreciation in 2024 significantly eroded profits.

Breakdown of the Dangote group FX losses

The highest losses were seen in Dangote Sugar refinery where FX losses went as high as N172.198 billion, causing a pre-tax loss of N108.92 billion.

This was a major deviation from the N82.3 billion pre-tax profit reported in the 2023 financial year when the company had N3.4 billion in FX losses.

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According to The Guardian, the company depends on importation for its major raw material – unprocessed sugar alongside other industrial outputs, meaning that its importation costs practically tripled in one year.

Dangote Cement was also equally just as affected and ended 2024 with FX losses of N249 billion. However, swift adjustment of prices and leveraging the economies of scale helped the company to still post a net profit of N503.2 billion.

This, overall, placed the cement manufacturer in a better financial position, having increased its profit by 10% from the N455.6 billion reported in 2023, where it had an FX loss of N113.6 billion

NASCON Allied Industries reported about N4.8 billion FX losses, eventually closing 2024 with a post-tax profit of N23.6 billion, about 14.9% up from the N20.5 billion profit reported in 2023.

Industry experts advise how to protect against losses

Commenting on the situation, the president of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, advised manufacturers to speed backward integration projects so they could source more materials locally.

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He added that strategic hedging mechanisms like forward contracts and currency swaps can also help to reduce FX exposure and protect against future losses.

Recall that MTN Nigeria and Airtel Africa recently decided to reduce FX exposure by repaying $1.2 billion in debts to forestall further losses.

Companies lose over N2 trillion to FX crisis

In related news, Legit.ng reported that Nigerian companies recorded a huge foreign exchange loss amid the naira depreciation against the markets.

The huge loss of over N2 trillion was attributed to the 69% naira depreciation that took the exchange from N907/$ at the end of 2023, to N1535/$ at the end of 2024.

The companies most hit include telecommunication companies, industrial goods, and also fast-moving consumer goods.

Proofreading by Nkem Ikeke, copy editor at Legit.ng.

Source: Legit.ng