Fears of job cuts rise as 7 firms suffer ₦623.6bn loss due to naira crisis
Experts have urged the big firms to look inwards and end the reliance on imported inputs to service Nigeria’s domestic market.
Most of the affected companies in the telecommunications, fast moving consumer goods (FMCG) and manufacturing sectors have traced the downward trend in their half-year reports to the foreign exchange (FX) crisis.
The looming situation comes amid the decision of the new administration led by President Bola Tinubu to unify the naira, a decision which pushed the exchange rate from ₦460/$ to around ₦750/$ and ₦770/$ recently.
The decision, which also comes amid the removal of fuel subsidy, has greatly affected Nigeria's economy as businesses have shut down operations due to their inability to cope with skyrocketing petrol prices which shot up from ₦190 and ₦205 per litre to around ₦580 per litre.
According to a report by The Guardian, seven Nigerian companies listed on the stock exchange which included Airtel, MTN, Nigeria Breweries, Guinness Nigeria, Nestle Nigeria, Cadbury Nigeria Plc and Dangote Cement incurred combined losses of about ₦623.6 billion due to the unification of the naira.
In its second-quarter report filed with the Nigerian Exchange Limited, Airtel Africa Plc, reported a loss of $151 million (₦130 billion when converted to naira using the current exchange rate) due to the unification of the naira.
MTN Nigeria Plc also suffered a huge foreign exchange loss of ₦131.4 billion which took a huge chunk off its profit.
The telecom provider noted in its 2023 second-quarter results that its pre-tax profits also dropped by 64% to ₦44.6 billion thus reducing its half-year profits to ₦200.3 billion compared to ₦268.6 billion during the same period in 2022.
Guinness Nigeria and Nigeria Breweries incurred exchange rate losses of ₦49 billion and ₦70.6 billion respectively in their 2023 half-year operations.
For Guinness, ₦18.1 billion was lost due to FX depreciation with a loss per share of ₦8.29 while Nigerian Breweries reported a net loss on foreign exchange of ₦70.6 billion
Nestle Nigeria Plc posted a pre-tax loss of ₦86.5 billion as it reported FX loss to the tune of ₦123.7 billion.
In the second quarter of 2023, Cadbury Nigeria Plc reported a massive loss before tax of ₦17.9 billion.
Cadbury’s loss was linked to the ₦20.9 billion write-down the company took as a result of the impact of the unification of the naira on its loans.
The building materials sector was not left out as Dangote cement industries also recorded huge losses in FX.
The company recorded ₦103.8 billion in FX losses, a development which has led to a drop in the company’s pre-tax profits by 14 percent to ₦93 billion.
While the economy seems to be buckling under the weight of the new policies, experts have urged the big firms to look inwards and end the reliance on imported inputs to service Nigeria’s domestic market,.
Vice President of Highcap Securities Limited, David Adonri said "Time has come for them to look inwards for their inputs otherwise, emerging market policies may chase them out of Nigeria. It is not likely that Nigeria will subsidise foreign exchange consumption again through the administrative allocation of forex at a nonmarket rate to anybody."
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