The Chief Executive Officer of Lafarge Africa, Khaled El Dokani, in a corporate document, revealed that the company’s capital was affected by the worsening exchange rate in 2022.
Blueprint learnt that due to the scarcity, firms have to wait longer to obtain forex in the official exchange market if they don’t want to pay exorbitant prices for the dollar.
But if in a hurry, they will have to pay a premium to buy dollars from the Bureau De Change operators in the black market.
Within 12 months, the exchange rate rose by 9.18 per cent in the official market from N422/$1 it started January 2022, to N461.50/$1 as of Friday, December 30, 2022.
Also, in the black market, the exchange rate closed last year around N740, in contrast to the N565/$1 rate it opened in January 2022 with. This is a 30.9 percent increment in the parallel market.
Before President Muhammadu Buhari assumed office in 2015, the exchange rate in the official market was around N200 but it has climbed to N461.5/$1, while in the black market, the exchange rate was circling around N400 before Buhari came to power.
This has increased the cost of production for companies operating in Nigeria and in need to import raw materials.
Commenting on the exchange rate and its impact on Lafarge’s earnings, El Dokani said, “In 2022, we recorded 27.3 percent and 29.3 per cent improvement in net sales and recurring EBIT respectively, compared to FY 2021 results.
“The worsening exchange rate situation led to revaluation losses, thereby constraining our Net Income growth to 5.2 per cent.”
A breakdown of the cement producer’s Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2022 showed Lafarge recorded 27.3 per cent in turnover and 5.18 per cent in profit after tax, with the firm’s cost of production increasing by 17.6 per cent.
Lafarge generated N373.24 billion in revenue selling cement between January to December 2022, surpassing the N293.08 billion turnover recorded the year before.
The 27.3 per cent rise in revenue growth was cut down by a hike in the cost of production which grew by 17.6 per cent, as cement production cost Lafarge N177.02 billion last year, against the N150.50 billion expended in 2021.
At the end of last year, Lafarge managed to make N53.64 billion net profit, which is 5.18 per cent more compared to the N51 billion profit after tax reported in 2021.
Quadri Olaitan is a journalist and contributor to Freelanews.com, covering news, public affairs, and human-interest stories.
