Here are consumer firms that reported losses in 2023

Most manufacturers in Nigeria faced significant challenges last year, particularly due to the devaluation of the naira.

This resulted in notable financial setbacks for many firms as they reported losses for the first time in some years. The difficulties were exacerbated by cash scarcity, the removal of the petrol subsidy, and the naira devaluation.

BusinessDay analysis of the latest unaudited financial statements of 12 manufacturing firms showed that four of them – Nestle Nigeria Plc, Cadbury Nigeria Plc, Nigerian Breweries Plc and Neimeth International Pharmaceuticals Plc – recorded a total after-tax loss of N215.99 billion in 2023 compared to an after-tax profit of N62.76 billion in the previous year.

Morison Industries posted a loss of N89.4 million, down from N107.5 million.

Other companies like Guinness Nigeria Plc recorded an after-tax loss of N5.23 billion for the six months ended December 2023, the first time in three years as against a profit of N4.02 billion in the same period of last year.

PZ Cussons, for the year ended November 2023, also recorded an after-tax loss of N74.1 billion for the first time since 2019, from a profit of N7.7 billion in the same period of 2022.

Three firms witnessed a combined rise in after-tax profit to N575.66 billion from N478.12 billion, while two experienced a decline in after-tax profit to N4.27 billion from N5.69 billion.

“The prevailing exchange rate environment poses notable challenges. On one front, it induces cost pressure, while on another front, it drives up expenses. Exposure to fluctuations in foreign exchange rates can result in higher finance costs, affecting bottom-line performance,” Ayodeji Ajilore, an investment research analyst with ARM Securities said.

Similarly, cement makers experienced a downturn, with two out of three companies recording declines in their bottom lines due to foreign exchange losses.

Since President Bola Tinubu announced petrol subsidy removal during his inauguration on May 29, pump prices have more than tripled to over N600, while the value of the naira has plunged following the floating of the currency.

The Central Bank of Nigeria in June merged all segments of the FX market into the Investors and Exporters window and reintroduced the willing buyer, willing seller model.

The naira has continued to depreciate against the dollar and other major foreign currencies since then.

The liberalisation of the foreign exchange regime weakened the naira from 463.38/$ to 889.86/$ as of December 15 last year. At the parallel market, the naira depreciated to 1,186/$ from 762/$.

A second round of devaluation in January further depreciated the naira to N1,595.1/$ at the official market on February 29. At the parallel market, it weakened to N1,580/$.

Nigeria’s headline inflation rate rose for the 13th consecutive time in January to 29.90 percent from 28.92 percent in the previous month, according to the National Bureau of Statistics.

Food inflation, which constitutes 50 percent of the inflation rate, rose to 35.41 percent from 33.93 percent.

Ajilore of ARM added that this situation also poses a risk of encumbering foreign direct investment.

“Investors are watching as factors such as volatile exchange rates and a general rise in consumer prices weaken consumers in the domestic market,” he said.

“Also, sustained losses drawing from shareholders’ funds could prompt divestment in the economy, triggering a more difficult macroeconomic state through a slowdown in output, elevated unemployment, and even more elevated consumer prices,” he said.

Analysis of data from sectors