Cadbury Nigeria, Nigeria Breweries Drop Into N183.4bn FX Loss
Cadbury Nigeria Plc and Nigerian Breweries Plc, two multinational companies, have announced a net loss of N183.4 billion on foreign exchange transactions in the 2023 financial year, becoming victims of the Central Bank of Nigeria (CBN) unification of the foreign exchange market.
InsideBusiness’ computation shows the duo registered N26.34 billion net loss in foreign exchange transactions in 2022.
Of the amount, Nigerian Breweries posted N153.33 billion net loss on foreign exchange transactions in 2023, up from N26.34 billion in 2022, while Cadbury Nigeria reported N30.07 billion in 2023 unaudited financial statement for the full year ended December 31, 2023.
Following the net loss on foreign exchange transactions, the two companies declared a loss of N133.94 billion in the 2023 financial year, tumbling from N13.77 billion profit after tax reported in 2022.
Nigerian Breweries declared a N106.31 billion loss in 2023, going down from N13.19 billion profit after tax in 2022, Cadbury Nigeria announced N27.63 billion loss in 2023 from N583.1 million in 2022.
The two are victims of the CBN unification policy, which has caused a steep fall in the value of the Naira, forcing a crash of the currency at the Nigerian Foreign Exchange Market (NAFEM) which closed in 2023 at N899.39 from its value of N448.05 against the dollar in 2022.
This development has made Nigerian Naira, the third world’s worst-performing currency in 2023, according to a report by Bloomberg which tracked 151 currencies in 2023. The naira, after closing at N1,043 per dollar, was the world’s worst performer after the Lebanese pound and the Argentine peso,
While financial analysts have predicted that the naira may plunge further in 2024, the naira’s performance this year has been described as its worst since the return to democracy in 1999, currently hovering around N1,500 and N1,600 against the dollar at the parallel market and the official market, respectively.
Reacting, the Managing Director, Cadbury Nigeria, Oyeyimika Adeboye blamed the massive devaluation of the Naira for the poor performance of businesses, particularly operators in the Fast-Moving Consumer Goods (FMCGs) sector that rely on imported inputs, in the period under review, she said the increase in the Company’s operating profit was an indication that the growth strategies that are put in place are yielding fruits.
“We operate in a challenging environment that requires a degree of creativity and tenacity to remain in business.
“Despite the strong economic headwinds, we faced during the year under review, Cadbury Nigeria remains committed to delivering value for its stakeholders. We shall continue to put our consumers at the heart of what we do,” Adeboye added.
The management of Nigerian Breweries, in a statement, said the Nigerian business landscape experienced significant shifts in 2023 with a substantial impact on businesses and livelihoods nationwide.
“The redesign of the naira notes which resulted in cash shortage that severely hampered social and economic activities nationwide set the tone for a turbulent year. High double-digit inflation rates (with food inflation at more than 30 per cent), removal of subsidy on premium motor spirit (fuel), devaluation of the naira, and foreign exchange scarcity further exacerbated the already difficult environment for the populace and businesses.
“Notwithstanding, the Company grew its revenue by nine per cent compared to the previous year, aided by a positive price mix. However, the operational profit fell by 15 per cent due to higher input costs and one-off reorganisation costs despite strong and aggressive cost savings and other efficiency measures.
“Coupled with the impact of the devaluation of the naira which resulted in a foreign exchange loss of N153 billion, the Company recorded a net loss of N106 billion during the year.
“In a difficult operating environment, the Board will ensure that the Company builds on its more than 77 years of experience of operating in Nigeria to cope with current realities.
“The Company will continue to be resilient and forward-thinking leveraging our broad portfolio, strong supply chain footprint and passionate workforce to drive long-term value creation for its shareholders and other stakeholders.”
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