Full List: Nestle, Dangote, BUA, 7 Other Companies Lost N988bn in 2023 Due to Naira Devaluation
- Analysis of financial data showed that ten consumer goods companies reported a loss N987.7 billion due to the naira devaluation
- In the previous year, the loss reported by the companies was only N129.8 billion, with the exception of Cadbury
- Financial experts cited the devaluation of the naira and FX losses as the primary reason for the massive loss recorded for the period
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
Financial data has shown that ten consumer goods companies in Nigeria lost N987.7 billion combined last year as a result of the devaluation of the naira.
Source: Getty Images
Compared to the previous year, when nine enterprises reported losing over N129.8 billion (exempting Cadbury), the FX loss reported by the firms in 2023 increased by more than seven times.
The companies are:
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- PZ Cussons Nigeria Plc
- Guinness Nigeria Plc
- Cadbury Nigeria Plc
- Nigerian Breweries Plc
- Nestle Plc
- Dangote Sugar Refinery Plc
- International Breweries Plc
- Dangote Cement Plc
- BUA Cement Plc
- Lafarge Africa Plc
More FX losses in 2023
For two of the companies, PZ Cussons and Guinness, that the FX loss figures cover a six-month period that ended in November and December, respectively.
For the six months ending in November 2023, PZ Cussons recorded an FX loss of N87.1 billion in 2023, which was higher than N2.7 billion in the corresponding period of 2022.
Compared to N4.53 billion during the same time in 2022, Guinness experienced a loss of N15.7 billion for the six months that concluded in December of 2023.
Further losses
According to further information from the companies' financial records, Dangote Sugar, Cadbury, Nigerian Breweries, Nestle, and International Breweries reported an aggregate after-tax loss of N346.7 billion in the previous year.
International Breweries reported a loss of N21.6 billion in 2022, while Cadbury, Nigerian Breweries, Nestle, and Dangote Sugar reported an after-tax profit of N117.4 billion.
In contrast to a profit of N7.67 billion in 2022, PZ Cussons reported an after-tax loss of N74.1 billion during the reported period, and Guinness reported a loss of N5.23 billion in 2023 versus a profit of N4.02 billion the year before.
BUA Cement reported an N69.45 billion profit, a decrease from N101.0 billion the previous year.
Similarly, Lafarge Cement's profit decreased from N53.7 billion to N51.1 billion. However, Dangote Cement reported a rise in profit from N382.3 billion to N455.6 billion.
Experts speak on companies' losses
Gabriel Idahosa, president of the Lagos Chamber of Commerce and Industry, said:
“Finance cost and local cost of energy, which has increased, have caused the big numbers of losses.”
Muda Yusuf, chief executive officer of the Centre for Promotion of Private Enterprises, said:
“The devaluation was massive as we moved from about N450/$ at the official rate to almost N1,600/$.”
According to him, most consumer enterprises are exposed to foreign liabilities because they source facilities, raw materials, and other items from their parent company.
Israel Odubola, a Lagos-based research economist, said:
“The FX loss widening is due to the effect of the naira depreciation. These companies had foreign currency-denominated obligations in their books.”
He added that with the massive naira depreciation, over 40% in 2023, the naira equivalent of their foreign currency-denominated obligations widened.
“I also noticed that some of these companies made losses not because revenue fell but because of the significant escalation of their finance costs in their books.”
The National Bureau of Statistics reports that the country's headline inflation rate increased to 29.90% in January from 28.92% the previous month due to increases in gasoline prices and foreign exchange costs.
The inflation rate for food, which makes up 50% of the total inflation rate, increased from 33.93% to 35.41%.
Top cement manufacturers pay shareholders
Legit.ng reported that despite the challenging business environment, Nigeria's three cement manufacturers have proposed N609.5 billion as a dividend payout to shareholders for the year ending December 31, 2023.
The dividend payments are a 30.3% increase compared to the N467.85 billion the companies paid to shareholders in 2022.
The three top producers are Dangote, BUA, and Lafarge Africa.
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Source: Legit.ng
