TotalEnergies Announces 20% Drop In Profits Due To Nigeria’s Exchange Rate Woes

TotalEnergies Marketing Nigeria Plc has, on Saturday, reported a 20% increase in profits amid the country’s ongoing economic challenges. In its 46th Annual General Meeting (AGM) in Lagos, where this was disclosed, shareholders approved a N8.488 billion dividend payout for 2023.

Despite a 32% increase in revenue from N482.47 billion in 2022 to N635.95 billion in 2023, the company’s profit after tax fell by 20% to N12.91 billion. The company’s chairman, Jean-Phillipe Torres, noted that this loss was due to the challenging operating environment in Nigeria.

EXCHANGE AND ECONOMIC WOES

Since 2023, the leading firm in Nigeria’s oil and gas sector has faced significant economic challenges under President Bola Tinubu’s administration.

Torres emphasised that the frequent change in the official exchange rate by the Central Bank of Nigeria (CBN) impacted TotalEnergies’ lubricant margins. Similar negative outcomes have been reported by other large firms like Nestle Plc and MTN, with several other major companies exiting the country.

MTN Nigeria Communications Plc, in April 2024, declared a loss after tax of N392.7 billion for the first quarter of 2024. This marked its second consecutive loss despite a significant increase in service revenue. According to its CEO, the loss was due to Nigeria’s rising inflation, currency devaluation, and foreign exchange shortages. The geopolitical disruptions and cash shortages in Q1 arising from redesigning the naira were also problematic.

“These factors created severe headwinds for our customers and our business during the year”, MTN stated.

Nestle Nigeria Plc also lost N104 billion to naira’s devaluation and experienced a depletion of shareholders’ funds. Airtel Africa was not left out on the losing streak. The firm reported a 99.6% decline in post-tax profit, reaching $2 million for the nine months ending December 2023. Airtel attributed this decline to foreign exchange challenges, particularly the $330 million exceptional loss after the devaluation of the Nigerian naira in June 2023 and the Malawian kwacha in November 2023.

TotalEnergies’ chairman also disclosed that the company did not import Premium Motor Spirit (PMS) in 2023. This was due to foreign exchange unavailability. The company relied instead on the Nigerian National Petroleum Corporation (NNPC) for supplies, which led to several PMS outages that slowed activities at their stations.

The company’s loss and similar others buttress the economic challenges experienced by firms and businesses under the current administration.

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