Worsening exchange rate situation led to revaluation losses —Lafarge Africa CEO

The Chief Executive Officer of Lafarge Africa, Khaled El Dokani, said the company’s capital was affected by the worsening exchange rate in 2022, a corporate document obtained on Tuesday disclosed.

Ripples Nigeria previously noted in a report “How Emefiele’s CBN policies enriched dollar hoarders” that the exchange rate worsened last year.

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 January 2022 with. This is a 30.9 per cent increment in the parallel market.

Commenting on the exchange rate and its impact on Lafarge’s earnings, El Dokani said, “In 2022, we recorded 27.3% and 29.3% improvement in net sales and recurring EBIT respectively, compared to FY 2021 results.

Read also:Lafarge Africa blames Naira/$ exchange rate for production challenges as revenue dips

“The worsening exchange rate situation led to revaluation losses, thereby constraining our Net Income growth to 5.2%.”

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.

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