- Companies in Nigeria suffered considerable losses in the first six months of 2023 following the CBN's decision to float the naira
- Data shows that top companies listed on the Nigerian exchange reported a combined foreign exchange loss of over N630 billion
- An expert explains to Legit.ng why the companies recorded huge FX losses as the naira exchange rate to the dollar is now above the N900 mark
Several companies listed on the Nigerian exchange have reported significant foreign exchange (FX) losses due to the devaluation of the naira.
You will recall that on June 14, 2023, the Central Bank of Nigeria (CBN), under the instruction of President Bola Tinubu, announced the floating of the naira, giving room for market forces to determine the exchange rate.
The decision has led to a severe depreciation of the naira against different foreign currencies, taking a severe toll on the financials of companies in Nigeria.
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Companies' forex losses
According to data gathered from the Nigerian Exchange listed companies have recorded combined forex exchange losses of N630.42 billion in their half-year 2023 financial result.
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The breakdown revealed that MTN, Nestle Nigeria, and Dangote Cement were hit the hardest, with a combined FX loss of N368.85 billion, representing 58.5% of the total FX loss among the 10 companies surveyed.
Reacting to the development, Dr Omobola Adu, an Investment Research Analyst with Afrinvest Research and Consulting, explained to Legit.ng that Nigerian companies are heavily affected due to exposure to foreign markets adding that Nigeria is largely an import-dependent market.
"For manufacturing firms and consumer goods, most of their raw materials, including machinery, are imported. They will need dollars to buy them. If they used to spend N1 million to buy around $2,000 at the N460 exchange rate, with the rate hitting as high as 800, that N1 million can now only get just over $1,000.
"Also, some of these companies have loans in foreign currencies for their business. When you factor in the exchange rate, the cost of servicing the loans will automatically be doubled."
Here is how much each company reported as forex losses after H1, 2023
- Unilever: N14.36bn
- Sterling Bank: N3.63bn
- Jaiz Bank: N0.11bn
- International Breweries: N40.67bn
- Guinness Nigeria: N49.10bn
- MTN: N131.45bn
- Nigerian Breweries (NB): N70.60bn
- Nestle Nigeria: N123.77bn
- Dangote Cement: N113.63bn
- Dangote Sugar: N83.10bn
Top 20 highest salary-paying companies in Nigeria
Meanwhile, in another report, the list of the highest salary-paying companies in Nigeria has been revealed, with MTN and UBA included.
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The list includes 20 companies from the oil and gas sector, including the financial industry.
The ranking was determined by considering the number of staff employed and the total expenses incurred on staff salaries.