Naira Depreciation Cost Nigerian Companies Over N2trn In Foreign Exchange Losses

• Nigerian companies have recorded a huge foreign exchange loss amid naira depreciation against the markets
• The FX losses were by telecommunication companies, industrial goods and also consumer goods
• The value of the naira has struggled against other foreign currencies in official and unofficial markets

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

MTN Nigeria Communications Plc and six other prominent companies collectively incurred staggering foreign exchange losses amounting to N2.06 trillion in 2024.

This marks a significant 28.9% increase from the N1.6 trillion recorded in 2023.

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The huge losses once again highlight the severe strain imposed by the naira's continuous depreciation against other foreign currencies.

By the end of 2024, the naira had plummeted to N1,535 per dollar, a stark contrast to N907.1 per dollar at the close of 2023, representing a 69% depreciation.

This drastic depreciation sent shockwaves through corporate balance sheets as foreign exchange liabilities surged when converted into local currency, Leadership reports.

Nigerian companies' FX losses

Among the hardest hit companies were Nestlé Nigeria Plc, Dangote Cement Plc, Lafarge Africa Plc, BUA Cement Plc, Nigerian Breweries Plc, and Dangote Sugar Refinery Plc.

MTN Nigeria led the pack in FX losses, reporting a staggering N2 trillion over the past two years due to naira devaluation and macroeconomic volatility.

In 2024 alone, despite a 36.1% revenue surge to N3.36 trillion driven by increased data and voice earnings, MTN posted a net loss of N400.44 billion, significantly worse than the N137.02 billion loss in 2023.

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The telecom giant attributed this to persistent naira depreciation (-41% year-on-year) and sharply rising finance costs (+82.2% year-on-year), exacerbated by Nigeria’s high interest rate environment (MPR: 27.5%).

MTN’s net foreign exchange losses soared by 25% to N925.36 billion in 2024, reflecting the brutal impact of currency depreciation alongside surging lease expenses (+92.8% year-on-year) and higher energy costs (+43.4%).

Despite these challenges, MTN recorded a net profit of N114.49 billion in Q4’24, a turnaround from the N122.03 billion loss in Q4’23, driven by cost optimisations, including renegotiated lease agreements with IHS and reduced net FX losses (-92.3% year-on-year).

There are expectations that MTN could return to sustained profitability in 2025 following a recent 50% tariff hike.

Other companies affected

Dangote Cement and Dangote Sugar Refinery collectively recorded N458.23 billion in FX losses in 2024, a 36.3% increase from 2023.

Dangote Cement reported N249.3 billion in FX losses, up 52% from 2023, while Dangote Sugar Refinery incurred N208.2 billion in losses, a 21.3% rise from the previous year.

Nestlé Nigeria and Nigerian Breweries also faced substantial losses.

Nestlé reported FX losses of N290.7 billion, contributing to a pre-tax loss of N221.6 billion, more than double the loss in 2023.

Nigerian Breweries posted FX losses of N157.59 billion, pushing pre-tax losses to N182.92 billion compared to N145.22 billion in 2023.

Naira depreciates further against US dollar

Legit.ng previously reported that the naira has lost more value against the US dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM).

According to data from the Central Bank of Nigeria, at the end of trading at the Nigerian Foreign Exchange Market (NFEM), the naira fell to 1,535.73/$1 on Tuesday, March 11.

It was the same outcome for the naira against the British pound sterling and also the euro in the official market.

Proofreading by Nkem Ikeke, copy editor at Legit.ng.