Eight companies have reported a total currency revaluation loss of N918.1 billion due to a 68.55 percent depreciation of the naira against the dollar by the end of September 2023.
After the Central Bank of Nigeria’s decision in June to let the market determine the local currency’s value, the naira slid from 461/$1 in December 2022 to 777/$1 in September 2023.
An analysis of financial statements for firms such as Dangote Sugar Refinery, Dangote Cement, Nestle Nigeria, Nigerian Breweries, Guinness Nigeria, MTN Nigeria Communications, Airtel Africa, MRS Oil Nigeria, and Seplat Energy revealed this significant exchange loss, attributed to the naira’s devaluation from N465/$ in May 2023 to N776.79/$.
According to the World Bank, the naira ranks among the worst-performing currencies in Africa, experiencing a nearly 40 percent depreciation since June, adversely affecting companies like Dangote Sugar, which reported a revaluation loss of N90.99 billion.
The firm said, “In line with the CBN circular of 14 June 2023 (Operational Changes to the Foreign Exchange markets) which introduced the “willing buyer willing seller” on the Investors and Exporters (I & E) Window based on the prevailing market rates, the Group changed its USD/Naira closing rate of 461 as at 31 December 2022 to 756 as at 30 June 2023 and now 776.79 as at 30 September 2023.
“Monetary Assets and liabilities for the Nigeria operations were revalued at this rate resulting in a revaluation loss of N72.88bn for the Group. This was driven by Letters of Credit and foreign vendor balances. The revaluation loss is included as part of N90.997bn for the group (N90.42bn for the company) in note 10.0 above. The loss has been fully recognised in the month of September 2023.”
Dangote Cement registered a revaluation loss of N99.02 billion, while Nestle reported a revaluation loss of N143.4 billion, attributing it to the recent devaluation of the naira.
MRS Oil recorded N2.37 billion in revaluation loss, and Seplat reported N16.38 billion. Nigerian Breweries marked an N86.83 billion revaluation loss for the period.
MTN Nigeria incurred a forex loss of N232.8 billion on its net foreign currency liabilities due to the naira’s devaluation from 461/$1 in December 2022 to 777/$1 in September 2023.
The company highlighted challenges in securing foreign exchange for its capital expenditure needs, in addition to the recorded forex loss.
“Our recognised forex loss for the nine months to September 2023 was 77 percent higher than the amount reported in H1 2023, where we measured all the trade lines after offsetting the naira-denominated cash cover that was provided to the banks. Following further analysis and review, we have remeasured all our trade lines to correctly exclude the naira-denominated cash cover that was provided to the banks.”
For Airtel, its foreign exchange loss after tax was $317m (N246.31bn). It noted, “Loss after tax was $13m driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in June 2023. This impact has been classified as an exceptional item.”
Similar to MTN, the company also documented difficulties in fulfilling its foreign exchange obligations.
It stated, “In some markets, we face instances of limited supply of foreign currency within the local monetary system. This not only constrains our ability to fully benefit at group level from strong cash generation by those OpCos but also impacts our ability to make timely foreign currency payments to our international suppliers.”
