Naira Devaluation: MTN, Notore, Others Declare N696.78bn Loss

Kayode Tokede

Following the devaluation of the Naira in 2023, which led to foreign currency obligation revaluation by most companies, MTN Nigeria Communication Plc, Notore Chemical Industries and eight others listed companies on the Nigerian Exchange Limited (NGX) declared a total loss of N696.78billion in 2023 as against N546.8 billion profit before tax generated in the 2022 financial year.

Others are: Omatek Ventures Plc, Juli Plc, International Breweries Plc, Nestle Nigeria Plc, Nigerian Breweries Plc, Japaul Gold & Ventures Plc, MTN Nigeria Communication Plc, R.T. Briscoe (Nigeria) Plc and Cadbury Nigeria Plc.

The loss declared by these companies is on the backdrop of foreign exchange unification policy of the Central Bank of Nigeria (CBN), hike cost of operations, among other macro economic challenges.

According to THISDAY investigations, MTN Nigeria Communication, Nigerian Breweries Plc and Notore Chemical Industries Plc’, were among the top five companies that declared highest losses in 2023 financial year.

Analysis of the companies’ results showed that MTN posted N177.9 billion loss before tax in 2023 from N518.8 billion reported in 2022. This, MTN said, was influenced by N740.43 billion net foreign exchange loss in 2023 from N81.82 billion reported in 2022

In a statement, the CEO, MTN Nigeria, Karl Toriola stated that, “2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the naira.

“These factors created severe headwinds for our customers and our business during the year. The inflation rate increased throughout the year, reaching 28.9per cent in December 2023 – the highest reading in 18 years – with an average rate of 24.5per cent.

“This was further exacerbated by higher fuel prices, arising from the removal of the fuel subsidy in May 2023, with the average prices of diesel and petrol up by 66.4per cent and 257.1per cent in 2023 to N1,416.8/litre and N600/litre, respectively.”

On its part, Nigerian Breweries Plc posted N145.2 billion loss before tax in 2023 from N17.34billion profit before tax recorded in 2022.

The company attributed the loss to N153.33 billion net loss on foreign exchange transactions in 2023 from N26.34 billion net loss on foreign exchange transactions declared in 2022.

Notore Chemical Industries despite dropping its revenue by 33 per cent to N21.55 billion, reported N114.18billion loss before tax in 2023 from N16.04 billion loss before tax declared in 2022.

The agro-allied & chemicals company suffered a N67.69billion exchange difference on bank borrowings in 2023 from N4.08billion in 2022.

As Nestle Nigeria reported N104.03 billion loss before tax in 2023 from N71.11 billion in 2022, International Breweries declared N97.3billion loss before tax in 2023 from N26.84billion in 2022.

The company declared a net exchange difference on translation of foreign currency-denominated balances of about N195.07billion in 2023 from N8.45billon in 2022 to bring its finance cost to N233.5 billon in 2023, representing an increase of 1005 per cent from N21.14billiion reported in  2022.

The Managing Director and CEO of Nestlé Nigeria, Mr. Wassim Elhusseini in a statement said, “The devaluation of the Nigerian Naira in 2023 which led to a revaluation of our foreign currency obligations undoubtedly impacted our financing cost and consequently the profit after tax. However, we remain optimistic of our capacity to overcome the current economic difficulties and emerge stronger.

“In June 2023, the apex banking regulating body adopted a more liberal foreign exchange management system and reintroduced the ‘willing buyer, willing seller’ model. This has resulted in a 96.7per cent unfavourable movement in the exchange rate against the US dollar from N461.1 against the dollar in December 2022 to N907.1 against the dollar (Nigerian Autonomous Foreign Exchange Market (NAFEM) rate in December 2023. This development contributed meaningfully to the upward pressure on the cost of doing business in Nigeria and these companies suffered worst performance in a decade.”

Speaking with THISDAY, the Vice President, Highcap Securities Limited, Mr. David Adnori stated that 2023 demonstrated as a challenging business environment for companies operating in the country.

“Amidst exchange rate unification, major consumer goods companies, among other sector have reported significant net foreign exchange losses and this situation has impacted significantly their bottom-line performance as reflected in the loss before tax recorded by these major companies,” he said.

The Director/Chief Executive Officer · Centre for the Promotion of Private Enterprise (CPPE), Mr Muda Yusuf had welcomed the bold step taken by the President Bola Tinubu’s led-administration towards the unification of the naira exchange rate.

He stated further that, “A unified exchange rate regime enhances liquidity and reduces uncertainty in the foreign exchange market. It would boost government revenue by a minimum of N4 trillion through additional remittance of exchange rate surplus to the federation account by the CBN and allow the use of naira cards for limited international transactions.

“It would facilitate the mopping up of naira liquidity in the economy in the short to medium term. This would impact positively the inflation outlook. The CPPE also expects the new policy to deepen the autonomous foreign exchange market through the liberalisation of inflows from Export Proceeds, Diaspora Remittances, Multinational oil companies, diplomatic missions, etc.”