Nairametrics|One of the oldest conglomerates in the country, AG Leventis recently released its results for the financial year ended 2016 and the first quarter 2017. Apart from releasing the results late which is a bad sign, the firm also made a billion naira loss due to the depreciation of the Naira that occurred last year.
Declines in performance by the company predate 2016. Financial statements for the year ended 2015 show the company made a loss of N176 million compared to a profit of N211 million in 2014. Principal reason for the poor performance was a spike in distribution expenses from N488 million in 2014 to N781 million in 2015. A foreign exchange loss of N83 million was incurred in 2015 as well a loss of N103 million in the preceding year. One would have expected that the company would either pay down its loans denominated in foreign currency or switch them to Naira before the full blown currency crisis that occurred in 2016.
Several of the group’s subsidiaries are dependent on foreign exchange for their inputs. Chrisstahl Nigeria Limited is a supplier of plumbing and industrial goods imported from all over the world. Druckfarben Nigeria limited another subsidiary is engaged in the production of ink and decorative paints. Leventis foods imports its raw and packaging materials. Excerpts from the Chairman’s statement in the 2016 annual report state that the businesses were adversely affected by the fx issue and could not pass the increased cost to consumers due to reduced purchasing power.
The Central Bank Of Nigeria (CBN) has pumped hundreds of millions of dollars into the foreign exchange market, and the massive depreciation that occurred last year seems to have slowed down. AG Leventis would need to get local suppliers for raw materials, or hedge its foreign exchange needs to prevent a repeat of the por performance in 2017.