Nigeria’s currency, the Naiara has seen its worst performing year, where it has dropped 37% against the dollar as of November 6th, coming behind other currencies like Sri Lanka’s rupee and Ghana’s cedi which are topping the list.
According to annual reports issued by the company, FrieslandCampina said “The company has a liability to exchange Naira to US dollars in the local market,”.
It also added that “This liability is entered into to meet international payment obligations. For this, higher costs are incurred compared to the official exchange rates in Nigeria,”.
However, the effects of the foreign exchange shortages have been felt not only on operating expenditure but finance costs have also risen, taking as much as €10m equivalent in local currency. This also adds up to the €63 million the groups have spent on servicing debt during the year.
FrieslandCampina Nigeria has also obtained a N40 billion short-term facility to finance the purchase of dollars which would settle its matured credit obligations.
“From time to time US Dollars are sourced in Nigeria at a higher exchange rate than the official exchange rate, because of the currency restrictions.
“The difference is recognised in costs of goods sold. At the end of 2022, this exchange rate is 66% higher,” the document reads.
FrieslandCampina N.V. still holds 67.8% stake in its Nigerian subsidiary and it trades its shares at the NASD OTC Securities Exchange.
The group revenue which went up by 22.4% at €14.1 billion for the said period under review, saw its profits jump from €172 million to €292 million.