Net foreign exchange losses due to the currency crisis and related macroeconomic challenges have continued to take huge tolls on the profitability and overall performance of companies listed on the Nigerian Exchange Limited (NGX), leading to a combined loss of N723.8 billion by five companies in half year (HI) of 2024 alone.

These five listed firms across various sectors are Nigerian Breweries Plc, Cadbury Plc, Nestle Nigeria Plc, Dangote Cement Plc and MTN Nigeria Plc. A breakdown of the losses showed that Cadbury posted N13.88 billion loss before tax in the period, 4.5 per cent lower when compared to N14.53 billion loss before tax posted in H1 of 2023.

The company incurred foreign exchange (FX) losses of N15.766 billion compared to N20.7 billion recorded in the same period in 2023. Dangote Cement suffered FX loss of N201.3 billion, against N113.3 billion recorded during the same period in 2023.

The business benefited from early-year gains in cement prices in Nigeria, allowing it to sell a ton of clinker at an average price of N127,614, up from N71,766 a year earlier.

However, fuel and electricity alone accounted for over half of direct expenses and year-over-year increases of 138.7 per cent were observed. For Nestle, its pre-tax loss in the same period stood at N252.5 billion, representing 265 per cent decrease from the N69.1 billion pre-tax loss posted in H1 of last year.

Nigerian Breweries recorded a loss of N85.2 billion in the first six months of 2024, up from N47.6 billion recorded in the same period of 2023. Its revenue rose to N479.8 billion, from N277.4 billion achieved in the corresponding period in 2023.

In a statement yesterday, the company secretary, Uaboi Agbebaku, said: “The company continues to navigate the challenging operating environment characterised by soaring inflation, exchange rate volatility, security challenges, elevated input costs and the rising cost of living,”

In the same period, MTN Nigeria also posted a pre-tax loss of N175.6 billion representing a 38 per cent year-on-year appreciation from the N282.3 billion pre-tax loss as of Q2 of last year.

The company recorded revenue of N1.54 trillion, marking a 33 per cent appreciation from N1.16 trillion as of H1, 2023. Since the beginning of 2023, the firms, especially those in the manufacturing and fast-moving consumer goods (FMCG) sector have continued to suffer FX crisis, which has threatened their shareholders’ funds and put them in a severe loss position.

Last year, Nestle, BUA, PZ Cussons, Dangote Sugar, Unilever, Cadbury, Guinness and Nigerian Breweries recorded combined FX losses amounting to N839.24 billion.

The stable exchange rate recorded in the second quarter of 2024 is evident in some of the financials, but the marginal recovery was not enough to offset the huge losses incurred by the companies.

Analysts said the firms must reposition their businesses to ensure consistent upbeat in revenue, efficient cost management strategy and hedging against foreign exchange losses.

They also noted that overall improvement in market conditions in the remaining quarters of the year would also impact positively on their performance. A stockbroker and Vice President of High cap securities, David Adonri, said the losses are mounting because of the FX exposure, which is impacting their bottom line negatively.

According to him, rising inflation has also eroded consumer purchasing power and complicated their ability to recover costs. He said the way out is for the firms to refinance their liabilities through equity injection and hedge their future FX risks using financial derivatives.

Adonri added that the companies would exit the lull expeditiously if macroeconomic conditions improved. President of NewDimension Shareholders Association, Patric Ajudua, said the economic challenges bedeviling the sectors have continued to escalate as some of those issues are yet to be tackled by the government.

He said the issue of naira devaluation, which is having a huge negative effect on the cost of clearing imported raw materials and the high cost of energy leading to high operating costs have persisted and are eroding the firm’s profitability.