Report shows 12 listed companies that may not be able to pay dividends because of heavy losses

• Twelve businesses listed connected the Nigerian Exchange reported a combined FX nonaccomplishment of N1.4 trillion
• These losses happened owed to circumstances beyond their control, and the effect is that shareholders mightiness request to hold different twelvemonth for dividends
• Industry experts person besides recommended ways that companies tin hedge against specified losses successful the future

Legit.ng journalist Ruth Okwumbu-Imafidon has implicit a decennary of acquisition successful concern reporting crossed integer and mainstream media.

Amid the turbulent economical situation successful 2024, 12 companies listed connected the Nigerian Exchange (NGX) person reported a cumulative Foreign Exchange (FX) nonaccomplishment of N1.4 trillion.

The businesses chopped crossed telecommunications, nutrient accumulation and manufacturing, and their immense losses supply further insights to the monolithic impacts of forex volatility connected firm earnings.

For astir of these companies, similar MTN Nigeria, Guinness Nigeria, Oando Plc, Nigerian Breweries and Bua Cement, the losses were a surge from the losses recorded the erstwhile year.

President Bola Tinubu's Renewed Hope Agenda promises a revamped concern situation successful 2025. Photo Credit: State House/Pius Utomi Ekpei
Source: Getty Images

Breakdown of the N1.4 trillion FX loss

MTN Nigeria was the highest with N925.36 cardinal FX nonaccomplishment successful 2024, up from the N740.43 cardinal nonaccomplishment reported successful 2023.

Bua Cement Plc’s FX nonaccomplishment grew from N69.96 cardinal successful 2023 to N92.10 cardinal successful 2024, portion BUA Foods Plc reported N100.40 cardinal successful FX losses successful 2024, astir 4 times higher than N26.33 cardinal successful 2023.

For Nigerian Breweries, FX losses successful 2024 amounted to N157.59 billion, somewhat up from N153.33 cardinal successful 2023.

Guinness Nigeria Plc’s FX nonaccomplishment grew from N3.89 cardinal successful 2023 to N42.49bn nonaccomplishment successful 2024, portion Nestlé Nigeria Plc went from a N9.36bn forex summation successful 2023 to a N7.06 cardinal nonaccomplishment successful 2024.

Some narrowed their FX losses

Oando Plc saw its FX nonaccomplishment constrictive down from N132.69 cardinal successful 2023 to N64.17 cardinal successful 2024, conscionable similar Honeywell Flour Mills Plc wherever FX losses reduced from N20.19 cardinal to N8.56 million.

The nonaccomplishment besides reduced importantly for Lafarge Africa Plc from N14.91 cardinal successful 2023 to N600.17 cardinal successful 2024, the PUNCH reports.

Some others experienced a reversal going from making FX gains successful 2023 to FX losses successful 2024. Nascon Allied Industries Plc reported a N2.06 cardinal nonaccomplishment successful 2024, wiping retired the N228.37m forex summation successful 2023.

Similarly, the Nigerian Aviation Handling Company reversed its N509.33 cardinal summation successful 2023, with a immense N1.85 cardinal nonaccomplishment successful 2024. Beta Glass Plc suffered N2 cardinal nonaccomplishment successful 2024, erasing the N1.79 cardinal summation recorded successful 2023.

The companies whitethorn not wage dividends

CEO of Cowry Treasurers Limited, Mr. Charles Sanni noted that the FX losses were mostly felt by those companies that heavy beryllium connected imports for their earthy materials oregon different manufacturing components, and that the interaction extends to the consumers who are made to carnivore the brunts.

The Nigerian Echange has a bull tally successful 2024 with the All Share Index increasing implicit 40% by twelvemonth end, but aforesaid cannot beryllium said for each the listed companies. Photo credit: Pius Utomi Ekpei
Source: Getty Images

He noted that with specified immense losses, paying dividends would magnitude to eroding shareholders' funds.

Sanni said;

“You tin lone wage dividends from profits. If they wage contempt these losses, they hazard moving into antagonistic shareholder funds. This mightiness not beryllium immediate, but eventually, banks volition hesitate to lend much wealth to them.”

He urged the companies to rethink their strategy and trim FX vulnerability conscionable similar MTN Nigeria had done, to debar being driven retired of business.

MTN and Airtel to go profitable again aft FX losses

In related news, analysts person projected profitability for MTN Nigeria and Airtel Africa successful 2025, contempt the immense FX losses.

Recall that MTN Nigeria has had 2 accordant years of reporting losses, without paying a azygous dividend to shareholders.

Analysts noted that with the reduced FX exposure, and 50% hike successful tariffs, some telecom operators should spot an improved equilibrium expanse successful 2025.

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Source: Legit.ng