NGX-listed firms reel from FX volatilities: ₦839.24 billion losses shake market
The Nigerian Stock Exchange (NGX) witnessed a tumultuous period as nine multinational firms grappled with staggering losses totaling ₦839.24 billion due to foreign exchange (FX) volatilities in the 2023 financial year. This financial earthquake underscores the far-reaching implications of currency market fluctuations on corporate balance sheets.
The turmoil stemmed from the Central Bank of Nigeria’s (CBN) policy shift, which triggered the unification of the forex market and the subsequent devaluation of the naira in June 2023. The abrupt devaluation, plunging the naira by over 40% from ₦471.67/$1 to ₦1,388/$1, sent shockwaves through the economy, intensifying challenges already posed by the removal of oil subsidies and geopolitical tensions like the Russia-Ukraine conflict.
Here are the nine NGX-listed companies that bore the brunt of FX volatilities:
1. Dangote Sugar Plc: The firm bore the heaviest burden, with a staggering ₦201.67 billion in FX losses, equivalent to 45.3% of its revenue.
2. Cadbury Nigeria Plc: Cadbury Nigeria grappled with ₦36.93 billion in forex losses, leading shareholders to vote on a debt-to-equity conversion to mitigate the impact.
3. Unilever Nigeria Plc: Unilever recorded losses amounting to ₦4.58 billion, signifying a 177.5% surge in FX losses compared to the previous year.
4. **PZ Cussons**: PZ Cussons reported forex losses totaling ₦4.95 billion during the period under review.
5. BUA Cement Plc: BUA Cement faced a daunting ₦69.96 billion in foreign exchange losses, marking a staggering 1,172% surge from the previous year.
6. Nestle Nigeria Plc: Nestle emerged as the second biggest loser, grappling with ₦195.07 billion in FX losses, a remarkable 2,208.52% surge from the previous year.
7. Nigerian Breweries Plc: Nigerian Breweries reported a net loss of ₦153.33 billion on foreign exchange transactions, reflecting the harsh impact of currency fluctuations.
8. Guinness Nigeria Plc: Guinness Nigeria bore the weight of a ₦49.09 billion forex loss, highlighting the pervasive nature of FX volatilities.
9. International Breweries Plc: International Breweries faced a formidable ₦70.37 billion in foreign exchange losses, further exacerbating its financial woes.
Collectively, these firms incurred a colossal loss of ₦839.24 billion, representing 18.06% of the ₦4.64 trillion revenue generated during the same period. The ripple effects of these losses reverberate across the market, posing challenges for investors, stakeholders, and the broader economy.
As uncertainties persist in the FX market, companies must adopt robust risk management strategies to navigate the treacherous terrain and safeguard their financial stability in an increasingly volatile global economy.
