Big companies listed on the Nigerian Stock Exchange (NGX) were massively hit by volatilities in the foreign exchange market, resulting in a cumulative loss of N839.24 billion in the 2023 financial year, representing18.06% of the N4.64 trillion revenue generated over the period.
According to a review of the 2023 full-year financial statements of 10 companies in Nigeria seen by Nairametrics, Dangote Sugar Plc recorded the highest FX losses, totaling N201.67 billion, a 45.3% of the company’s revenue over the period, while Cadbury recorded N36.93 billion losses. Unilever recorded the lowest losses at N4.58, followed by PZ Cussons at N4.95 billion in the year under review.
BUA Foods recorded N100.68 billion losses, Nestle Plc, N195.07 billion, Nigerian Breweries, Guinness Nigeria, and International Breweries posted N153.33 billion, N49.09 billion and N70.37 billion respectively in foreign exchange losses for the year, while Nestle Plc emerged as the second biggest loser at N195.07 billion. Some of the losses were unrealised for debt obligations that are not yet due.
The increase in foreign exchange losses is as a result of the policies of the Central Bank of Nigeria (CBN) with respect to the unification of the foreign exchange market and the devaluation of the naira during the year. In June 2023, the CBN confirmed the unification of the multiple foreign exchange market- a move which saw the naira depreciate by over 40% from N471.67/$1 to over N600 to the USD immediately after the introduction of the policy. The impact of the unanticipated drop in the value of the naira on companies’ balance sheets was severe as shareholders’ funds were totally wiped out for some companies.