PZ Cussons Nigeria Plc has disclosed in its Q1 2020/2021 financial statement that the company suffered a foreign exchange loss of N1.052 billion, prompted by the fall in the value of Naira against the US Dollar.
The foreign exchange loss of N1.052 billion the company incurred is 1548.5% higher than the N63.83 million the company incurred the same period last year.
This eventually triggered a Loss After Tax of N212.36 million, as the Operating profit of N755.44 million was completely erased.
Exchange loss is caused by a change in the exchange rate used, and with the fall in the value of Naira against the US Dollar this year, the company earnings were exposed to the financial risks from the fall in the international value of the local currency.
- Revenue increased by 18.3%
- Cost of sales increased by 5.5%
- Gross profit increased by 80.2%
- Operating profit increased by 173.7%
- Foreign exchange loss increased by 1548.5%
- Loss after taxation decreased by 80.6%
It is important to note that the loss PZ incurred in the period under review, is 80.6% lower than the loss it reported in the corresponding period last year. This is a result of the 18.3% increase in revenue, which was driven by the increase in sales from the core business of the group.
The major drive in demand which led to the increase in PZ Cussons’ revenue, came from the continued closure of Nigeria’s land borders since August 2019. This development helped to unlock markets for the company’s products, which was once lost and proliferated by smuggled products.
However, the market demand that Nigeria’s border closure opened up, created the necessary shift that compensated for the weak consumer spending, spiked by the low disposable incomes and the COVID-19 impact on household income.