Despite the humongous losses posted by multinational corporations listed on the Nigeria Exchange Limited in their 2023 financial year reports, blaming it on foreign exchange, the flip side shows the exact opposite among some indigenous heavy weight firms listed on the Exchange.
Recall that the likes of Nestle Nigeria Plc, MTN Nigeria Plc, PZ Cussons Plc have reported losses in their 2023 audited financial accounts posted by the NGX last week with all of them having shareholders fund wiped out due to the negative impact of foreign exchange on their operations during the year.
For instance, the Chief Executive Officer of MTN Nigeria, Karl Torlola, while announcing the company’s financial performance in 2023, in a notification to the NGX last weekend, said, “2023 witnessed a very challenging operating environment characterised by rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1 arising from a redesign of the Naira. These factors created severe headwinds for our customers and our business during the year.”
On how foreign exchange affected the financials for the year, he said, “The significant devaluation of the Naira in 2023 resulted in a materially higher net forex loss of N740.4 billion (2022 restated: N81.8 billion), reflected within net finance costs, which resulted in a reported loss after tax of N137.0 billion compared to a restated PAT of N348.7 billion in 2022.
“This has resulted in negative retained earnings and shareholders’ equity at the end of December 2023 of N208.0 billion and N40.8 billion, respectively. Adjusting for the net forex loss, PAT would have been N344.5 billion (down by 14.3 percent).”
While this has become the story from the multinationals, financial accounts of some indigenous companies bring a ray of hope to the situation.
Analysis of the results of some non-banking publicly traded institutions from Nigeria look encouraging.
Those in this league so far include Dangote Cement Plc and Seplat Energy Plc.
Advocating for appreciable ireportage of these stocks and their positive impact on the Nigerian capital market, Chairman Tekedia Capital, Prof Ndubuisi Ekekwe, said it is also fair to educate investors appropriately.
He described both stocks as rain makers as they continue to create value for investors.
“Dangote Cement hauled in record windfall income after converting net investments in foreign operations into the Naira, more than doubling the company’s comprehensive income to N1 trillion.
“Seplat, another indigenous company with an international play, reported more than eightfold in comprehensive income: ”Seplat Energies raked in N885.1 billion in total comprehensive income – the combined earnings that companies receive from unexpected gains in addition to profit – after the energy giant turned Nigeria’s foreign exchange crisis into its advantage.
“So, indigenous Nigerian companies are having great parties while subsidiaries of multinational firms are struggling.
“Advantage to the home team, as always, in everything. Go and build multinational companies, out of Nigeria, and the floating of Naira will work for you,” he stated.
