No respite for investors as rising costs shrink FMCG firms’ earnings

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Flourmills News

FMCG,Patrick Ajudua

The effect of naira devaluation, rising inflation and interest rate hikes has continued to take a huge toll on the performance of firms under

the fast-moving consumer goods , causing their financial cost to soar. the fast-moving consumer goods , causing their financial cost to soar.

However, due to rising costs and soaring interest rates, which have affected the cost of funds, the company incurred N36 billion in the net cost of finance for the operating year, representing a leap of 160 per cent YoY from N14 billion in 2023 and translating into a net loss after tax of N10.1 billion from a profit of N256 million.

From May 2022 to October 2023, MPR was raised by 725 basis points to 18.75 percent. This year, the interest rate was raised by 200 basis points from 22.75 per cent in February to 24.75 per cent in March 2024. “Most companies in the manufacturing sector suffered much from the effect of naira devaluation, inflation, high-interest rate and energy cost. This has resulted in a loss position and made it difficult for most of them to pay dividends,” he said. Head Equity, Planet Capital, Paul Uzum said the last year has been very tough for firms in the consumer goods sector.

“For Flourmills, it is expected that this loss is a one-off event, and the company will revert to its winning ways of consistent profit-making by the next financial year.”

 

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