Nigeria’s largest publicly listed drugmakers are pushing ahead with efforts to surmount the pain of foreign exchange scarcity in a bid to maintain earnings growth, BusinessDay’s findings have shown.
According to data from the Nigerian Exchange Limited, drugmakers such as May & Baker Nigeria Plc, GlaxoSmithKline Consumer Nigeria Plc, and Neimeth International Pharmaceuticals Plc recorded forex gains; Fidson Healthcare Plc reduced its losses by 60 percent, while Morison Industries Plc and Pharma-Deko Plc did not provide any information on forex transaction.
May & Baker Nigeria reported a forex gain of N458.94 million in 2022 as against a loss of N141 million in 2021, thereby accounting for 27 percent of other operating income earned during the period.
GlaxoSmithKline Consumer Nigeria Plc reported a net forex gain of N22 million in 2022, compared to a gain of N380,000 reported in 2021, while Neimeth International Pharmaceuticals recorded a forex gain of N6.22 million in 2022 compared to a loss of N93,000 in 2021.
“Companies that recorded foreign exchange gains were able to leverage on their ability to export goods and earn in foreign currency, thereby impacting profitability positively,” said Gbolahan Ologunro, a senior analyst at Cordros Capital.
Data compiled by BusinessDay show that collectively, the four drugmakers grew profit by 9.99 percent to N6.27 billion in 2022 from N5.69 billion in 2021.
“Most corporates recorded foreign exchange losses on the back of exposure to foreign currency liabilities usually debt, and also in terms of payment for equipment imported, thereby negatively impacting profitability of companies in 2022,” Ologunro added.
Fidson Healthcare reported a forex loss of N759.59 billion in 2022, a 66.69 percent decline from the net loss of N2.28 billion reported in 2021.
Imokha Ayebae, head of finance and accounts at Fidson Healthcare Plc, said the company is only able to access about 30 percent of its foreign currency requirements from the central bank.
“The company must instead turn to commercial lenders and bureaux de change sources, which raises its average dollar costs to around N500, about 15 percent than the official rate of about N436,” Ayebae told Bloomberg last December.
In Africa’s biggest economy, experts say forex management system, which has caused dollar scarcity and spooked foreign investors, is one of the major challenges awaiting the next president.
Last year, the country’s currency lost 23.65 percent of its value (year-on-year) against the dollar at the parallel market, popularly known as the black market.
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“It is unclear if the new administration would prefer a floating exchange rate regime, but the manifesto states that ‘the exchange rate cannot be ignored nor left to the whims of the market’,” Chinwe Egwim, the chief economist at Coronation Merchant Bank, said.
At the Investors and Exporters (I&E) Foreign Exchange Window, the naira ended last year with 8.56 percent (year-on-year) depreciation against the dollar.
The I&E window closed the year with the dollar being quoted at N461.50/$, compared to N422/$ at the beginning of the year, data from FMDQ indicated.
On Monday, traders quoted the naira at N752.55 per USD.
“FX challenges remain a bottom-line,” Bismarck Rewane said at this month’s breakfast meeting at the Lagos Business School.
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