As the Naira continued to plummet at the foreign exchange market over Central Bank of Nigeria (CBN) reforms, MTN Communication Plc, Nestle Nigeria Plc, Dangote Cement Plc, and eight other listed companies on the Nigerian Exchange Limited (NGX) have reported N2.02 trillion foreign exchange losses in half year ended June 30, 2024.
This represents 87.3 per cent increase from N1.08 trillion reported in the half year ended June 30, 2023.
Other eight listed companies investigated by THISDAY with significant foreign exchange losses in the period under review include: Dangote Sugar Refinery Plc, Nigerian Breweries Plc, BUA Foods Plc, and BUA Cements Plc.
Also, the likes of International Breweries Plc, Cadbury Nigeria Plc, Lafarge Africa Plc, and Eterna Plc reported FX losses that impacted on profit in the period under view.
The apex banking regulating body had announced changes in the Nigerian foreign exchange operations which required the immediate collapse of all segments of the market into the Investor & Exporter (I&E) foreign exchange window and reintroduced the 'willing buyer, willing seller' model.
Naira at the official rate in the first six months of 2024 dropped to N1,470.191against the dollar from N899.393 against the dollar when it closed in 2023.
The depreciation of the local currency has impacted these companies' third party loans, which eventually led to rising net exchange loss in the period under review.
The CBN under the new administration of President Bola Tinubu has aggressively introduced new foreign exchange policies in a move to liberalise the market and attract more inflow.
THISDAY checks revealed that most investigated companies continued to report worst earnings and its impact reflecting on dividend pay out and dwindling stock price on NGX.
THISDAY analysis of the companies results showed that MTN Nigeria Communication, Nestle Nigeria and Dangote Cement reported the highest foreign exchange losses in the period under review.
Specifically, telecommunication giant, MTN Nigeria Communication that declared loss in 2023, announced a whooping N974.98 billion foreign exchange loss in H1 2024, about 87.3 per cent increase from N520.42 billion reported in H1 2023.
With a foreign exchange gain of N87.3 billion in H1 2024 from N65.76 billion in H1 2023, and N974.98 billion foreign exchange loss in H1 2024 from N520.42 billion in H1 2023, the telecommunication company closed the period with N887.68 billion net foreign exchange loss as against N454.7 billion reported in the corresponding period of 2023.
The Chief Executive Officer, MTN Nigeria Communication, Mr. Karl Toriola in a statement stated that, " the depreciation of the naira between the period ended December 2023 and June 2024 also resulted in materially higher net foreign exchange losses of N887.7 billion in H1 2024 from N454.7 billion in H1 2023, arising from the revaluation of the foreign currency-denominated obligations.
"This led to a ls after tax of N519.1 billion in H1 2024 compared to a restated loss of N85.66 billion in H1 2023 and a negative retained earnings and shareholders' equity of N727.2 billion and N577.7 billion, respectively.
"Adjusting for the net foreign losses, PAT would have been N102.3 billion (down by 56 per cent). Further adjusting for the impact of foreign exchange in our operating expenses, PAT would have been up by 11.3 per cent to N267.5 billion."
For Nestle Nigeria, it announced N263.71 billion net exchange loss on translation of foreign currency denominated balances in H1 2024 from N118.5 billion in H1 2023, while Dangote Cement reported N201.3 billion net foreign exchange loss in H1 2024, an increase of 77.2 per cent from N113.63billion reported in H1 2023.
According to the management of Dangote Cement, the net foreign exchange loss of N201.3B from its foreign currency obligations reflected on the devaluation of the naira from N951 against the dollar at the end of December 2023 to N1,488 against the dollar at the end of June 2024.
Amid challenges, the cement maker reported a group's profit for H1 2024 at N189.9 billion, about 6.3 per cent increase from N178.68 billion. Consequently, its earnings per share increased to N11.26 in H1 2024 from N10.39 in H1 2023.
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The Chief Executive Officer, Dangote Cement, Arvind Pathak in a statement said, "Despite the challenges of elevated inflation, high borrowing cost and a further weakening of the currency in the first six months of the year, our business demonstrated strong resilience. This was due to our rigorous focus on cost minimisation and our diversified business model."
Finance expert, and Vice President, Highcap Securities Limited, Mr. David Adnori urged these companies to restructure their foreign currency liabilities in a way that enables them to liquidate the liabilities immediately, but simultaneously rebooks them at the current foreign exchange rate.
He added, "With the liabilities liquidated, you realise the foreign exchange losses and deduct it from taxable income. By doing this, both the government and the shareholders will have to wait until the business normalises."
