"N777/$": Dangote Cement, Seplat, 6 Other Firms Record N918.1bn Loss Due to Naira Depreciation
- Dangote Sugar, Dangote Cement, Nestle Nigeria, Nigerian Breweries, and four other firms recorded huge losses due to the naira devaluation
- The companies stated that the CBN’s plan to float the naira on June 14, 2023, negatively impacted their profit margins
- Dangote recorded the highest devaluation loss of N990 billion in the period under review
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About eight companies have declared N918.1 billion as currency revaluation loss following a 68.55% decline in the naira’s value against the dollar as of the end of September 2023.
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Dangote records the biggest devaluation loss
Due to the decision of the Central Bank of Nigeria’s (CBN) move on June 14, 2023, to allow the market to determine the value of the naira, the local currency has depreciated from N461 per dollar as of December 2022 to N777 per dollar in September 2023.
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A breakdown of the companies’ financial statements revealed that the devaluation of the naira from N465 per dollar at the end of May 2023 to N776 per dollar caused exchange losses for them.
The top companies include Dangote Sugar Refinery, Dangote Cement, Nestle Nigeria, Nigerian Breweries, Guinness Nigeria, MTN, Airtel, MRS Oil, and Seplat Energy.
The naira emerges as the worst-performing currency in Africa
The World Bank has stated that the naira is one of the world’s worst-performing currencies, negatively impacting companies like Dangote Sugar, which recorded N90.99 billion.
The naira has lost 40% of its value since June, when CBN embarked on the Forex reforms.
According to the company, CBN’s circular of June 14, 2023, which introduced the willing buyer and willing seller on the Investor and Exporters (I&) window based on the market rates, affected the Group's profit margin for the period under review as it reevaluated its exchange rate from N461 to N776.79 per dollar as of September 2023.
Africa’s biggest cement manufacturing company, Dangote Cement, recorded N99.02 billion in the period under review.
Nestle Nigeria recorded N143.4 billion revaluation loss. The company revealed that due to the recent naira devaluation, it evaluated four Forex obligations, leading to an N143.4 billion loss for the period under review.
MRS Oil recorded N2.37 billion, and Septlat recorded N16.38 billion.
Nigerian Breweries recorded an N86.83m loss for the review period. In contrast, MTN Nigeria recorded N232.8 billion Forex loss on its net Forex liabilities due to the devaluation of the naira from N461 per dollar in December to N777 per dollar in September 2023.
Other companies with the biggest Forex losses
The company highlighted that aside from recording FX loss, it had issues sourcing Forex for its capital expenditure needs.
Punch reports that Airtel experienced Forex loss after tax of N246.31 billion, noting that loss after tax was $13 million and driven by Forex losses of N471 million due to naira devaluation.
Like MTN, the firm also documented its challenge with meeting its foreign exchange obligations.
It stated:
“In some markets, we face a limited supply of foreign currency within the local monetary system. This constrains our ability to fully benefit at group level from strong cash generation by those OpCos and impacts our ability to make timely foreign currency payments to our international suppliers.”
In a new report seen by Legit.ng, the Economist Intelligence Unit (EIU) said the Naira will crash to about N1,068 per dollar in the official market.
EIU stated in its report for Nigeria that the country will continue to experience currency losses due to the massive size of the black market and the country’s low reserves.
The EIU revised its exchange rate forecast to a more considerable devaluation in 2025 to reflect the widening disparity between the official and parallel exchange rates.
The report predicted Nigeria will try to merge the exchange rate windows when this happens.
Domiciliary account balance hits $29bn as naira falls to lowest in history at official market
Legit.ng reported that the total balance in domiciliary accounts in commercial and merchant banks in Nigeria rose by more than a fifth in June 2023, according to data obtained from the CBN.
The foreign currency lodgments, primarily in dollars, stood at N17.65 trillion in June, up from N10.72 trillion in May, CBN data revealed.
When converted to the dollar, the amount rose by 21% to $28.92 billion at the exchange rate of N610.17 to a dollar as of June 2023 from $23.20 billion.
Source: Legit.ng
