Nestle Plc, Dangote Sugar Refinery Plc and Dangote Cement Plc are the top listed consumer firms that reported the highest Foreign Exchange loss last year, according to data compiled by BusinessDay.
The rest are Nigerian Breweries Plc, International Breweries Plc, BUA Cement Plc, Cadbury Nigeria Plc and Lafarge Africa Plc.
Analysis of the firms’ financial statements from the Nigerian Exchange Limited shows that Nestle’s FX loss rose to N195.07 billion in 2023 from N8.45 billion in 2022.
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Dangote Sugar’s FX loss totalled N172.2 billion, up from N1.89 billion, Dangote Cement recorded N164.08 billion, up from N53.93 billion; Nigeria Breweries recorded N153.33 billion, up from N26.34 billion.
International Breweries rose to N72.42 billion from N13.46 billion; BUA Cement recorded N69.95 billion, up from N5.5 billion.
Further analysis of statements revealed that their total FX loss was N885.0 billion, up from N122.7 billion in 2022.
“The FX loss widening is due to the effect of the naira depreciation. These companies had foreign currency-denominated obligations in their books,” Israel Odubola, a Lagos-based research economist, said.
He added that with the massive depreciation of the naira, over 40 percent in 2023, the naira equivalent of their foreign currency-denominated obligations widened.
PZ Cussons reported an FX loss of N87.1 billion for the six months ended November, up from N2.7 billion in 2022.
Guinness had a loss of N15.7 billion for the six months ended December, up from N4.53 billion in the same period of 2022.
“The devaluation was massive as we moved from about N450/$ at the official rate to almost N1,600/$,” Muda Yusuf, chief executive officer of the Centre for Promotion of Private Enterprises, said.
He said most of the consumer firms have exposure in terms of their foreign liabilities that they used to get their raw materials, facilities or all sorts of things from their parent companies.
Last June, the Central Bank of Nigeria merged all segments of the FX market into the Investors and Exporters window and reintroduced the willing buyer, willing seller model.
The liberalisation of the foreign exchange regime weakened the naira from 463.38/$ to 1,602/$ as of March 5, 2024. At the parallel market, the naira depreciated to 1,590/$ from 762/$.
The increase in petrol prices and foreign exchange costs contributed to the surge in the country’s headline inflation rate, which rose to 29.90 percent in January from 28.92 percent in the previous month, according to the National Bureau of Statistics.
The tough business environment also pushed multinationals to exit Africa’s biggest economy as Procter & Gamble, GlaxoSmithKline Consumer Nigeria, Equinor, Sanofi and Bolt Food announced plans to leave the country this year.
