Nestle, NBL, MTN, Guinness, Others Lose N1.24tn Amidst Forex Crisis

According to recent reports, more multinational corporations and indigenous companies operating in the country risk more foreign exchange losses as rate volatility continues to pose a challenge to operations. From June last year to March 1, 2024, the average exchange rate at the Nigeria Autonomous Foreign Exchange Market, NAFEM, surged by about 144 %, from an average rate of N634.56/$ in June 2023 to N1,548.25/$ in March. The same applies to the parallel market otherwise known as a black market where the exchange rate per dollar as of March 1, 2024, stood at N1,600.00/$. Analysts and economy experts have said the effects of the forex losses include job loss, reduction in company income tax earnings by the government, absence of dividend payment for shareholders, and closure of plants that may result in further exit of multinationals. According to analysts, the devaluation of the naira coupled with rising interest rates, led to increased operating costs for multinationals, whose major costs including finance costs are denominated in foreign currencies. Findings revealed that seven big firms operating in the country have suffered severe losses in their operations for the financial year ended December 31, 2023, owing majorly to ravaging forex losses, high production, and operating costs among others. A review of companies that have released their full-year 2023 financial results showed that they incurred whopping forex losses of about N1.24 trillion, leading to poor performance as they recorded loss before tax of about N415.43 billion. The companies include Nestle Nigeria Plc, N195 billion, Nigeria Breweries, N153 billion, BUA Cement N69.95 billion, Lafarge Africa N21 billion, Guinness Nigeria, N49.1 billion, MTN, N740 billion and Cadbury Nigeria, N13.5 billion.