The first quarter of 2025 painted a mixed picture of the impact of foreign exchange volatility on Nigerian manufacturers. While the aggregate foreign exchange loss for the surveyed companies decreased compared to the same period in 2024, individual company performances varied significantly, highlighting the complex and unpredictable nature of currency fluctuations and their impact on business operations. The total reported loss for the first quarter of 2025 stood at N1.91 billion, a 37.8% reduction from the N3.06 billion loss recorded in the first quarter of 2024. This overall decrease, however, masks the significant challenges experienced by several individual companies who faced substantial increases in forex losses.
Nascon Allied Plc, for instance, witnessed a considerable improvement, reducing its forex loss from N3.06 billion in Q1 2024 to N55.38 million in Q1 2025. This dramatic reduction suggests successful mitigation strategies employed by the company to navigate the turbulent forex market. Nigerian Breweries also experienced a remarkable turnaround, improving its forex position from a substantial loss of N72.85 billion in Q1 2024 to a much smaller loss of N178.01 million in Q1 2025. This substantial improvement represents a 144.3% positive change, indicating a more robust financial strategy in managing foreign exchange risks.
However, other companies faced significant headwinds. BUA Cement, a major player in the construction industry, saw its forex gain of N1.11 billion in Q1 2024 turn into a loss of N262.71 million in Q1 2025. This dramatic swing highlights the vulnerability of companies, even industry giants, to the unpredictable nature of forex markets. Similarly, Dangote Cement, another dominant force in the cement industry, experienced a decline in its forex position, moving from a gain of N410.36 million in Q1 2024 to a loss of N11.84 million in Q1 2025. This 102.9% decline suggests challenges in managing foreign currency exposure within the cement sector.
Vitafoam Nigeria faced the most dramatic increase in forex losses, experiencing a staggering 2,687.7% surge. The company’s forex loss escalated from N47.18 million in Q1 2024 to N1.31 billion in Q1 2025, indicating a substantial impact of currency fluctuations on its financial performance. Beta Glass also witnessed a significant increase in forex losses, rising from N21.98 million in Q1 2024 to N94.22 million in Q1 2025, representing a 329.2% increase. This underscores the challenges faced by manufacturers reliant on imported raw materials and operating in a volatile currency environment.
Berger Paints, on the other hand, reported a relatively negligible forex loss of N768 in Q1 2025, compared to zero loss in the same period of the previous year. This minimal impact suggests a relatively low exposure to foreign currency transactions. The varying experiences of these companies underscore the complexity of managing forex risk in Nigeria’s volatile economic environment. While some companies successfully navigated the challenges and reduced their forex losses, others faced significant setbacks, demonstrating the need for robust forex risk management strategies.
The reported figures for Q1 2025 provide a snapshot of the ongoing challenges faced by Nigerian manufacturers dealing with foreign exchange volatility. The significant variations in individual company performance highlight the need for tailored strategies to mitigate forex risks. While the overall reduction in aggregate forex losses compared to Q1 2024 offers a glimmer of hope, the significant losses incurred by some companies underscore the persistent vulnerability of the manufacturing sector to currency fluctuations. The long-term impact of these fluctuations on the sector’s growth and profitability remains a key concern, emphasizing the need for continued monitoring and proactive measures to mitigate forex risks. The data also highlights the importance of government policies aimed at stabilizing the forex market and providing a more predictable operating environment for businesses. Finally, the significant losses reported in 2024, totaling N255.72 billion for six listed companies, serves as a reminder of the scale of the challenge and the potential for significant financial impact on businesses operating in Nigeria.
