Consumer Goods Firms’ Short-term Debts Worsen Amid Earnings Slump

Consumer goods firms in Nigeria are facing a liquidity crisis after an earnings slump, pm triggered by a combination of factors including rising inflation, supply chain disruptions, and weakening consumer demand.

The total current liabilities of nine listed consumer goods firms stood at N2.01 trillion current liabilities as at September 2023, which is higher than the cash and cash equivalent of N579.74 billion, according to data gathered by VOP Business desk.

The nine firms which include Nestle Nigeria, Unilever Nigeria, International Breweries, Cadbury Nigeria, Nigerian Breweries, BUA Foods, Nascon, Dangote Sugar, Champion Brewery recorded a combined 23 percent increase in current liabilities as at September 2023.

George Onafowokan, managing director/chief executive officer at Coleman Technical Industries Limited said the cash reserves to fund short-term obligations of most consumer goods firms have shrunk in recent months due to rising macroeconomic challenges.

Analysis of the financial statements of nine consumer goods firms showed a 95 percent slump in profit after tax to N6.48 billion as at September 2023.

Other experts said most firms may struggle to pay dividends due to rising net losses on the back of foreign exchange losses brought on by the unexpected devaluation of the currency by the central bank that ballooned dollar-denominated liabilities.

Following a CBN move in June to allow the market to determine the value of the local currency, the naira had fallen from N461/$1 as of December 2022 to N777/$1 in September 2023.