Manufacturers are optimistic the liberalisation of the foreign exchange (forex) market has ushered in a new era of access, predictability and competitiveness.
Group Managing Director, Vitafoam Nigeria Plc, Mr. Taiwo Adeniyi, said while the implementation of a market-driven mechanism for the forex market had faced initial challenges and several companies recording forex-related losses, the new forex system has potential to address the flaws of the previous managed-float system.
Manufacturers and other forex users had faced significant challenge of access to forex under the previous hugely subsidised managed-float forex system, forcing Nigerian companies to build up forex exposures to international creditors and parent companies.
The liberalisation of the forex market saw several Nigerian companies, including Vitafoam Nigeria, with uncleared forex obligations incurring forex-related losses.
“But the worst is over on the challenges of forex with the liberalisation policy of the federal government,” Adeniyi said.
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Vitafoam Nigeria recorded a forex loss of N12.7 billion during the year ended September 30, 2024, which significantly impacted the company’s bottom-line despite about 77 per cent growth in gross profit.
Adeniyi said the company’s impressive performance was moderated by the cost incurred on forex, assuring shareholders that the company remains resilient and in good stead for sustained growth.
“Our diversified product portfolio will drive future growth while strategic investments backed by research will enhance our competitiveness,” Adeniyi said.
He said the board of the company has recommended distribution of N1.375 billion as cash dividend for the 2024 business year, implying a dividend per share of N1.05.
Key extracts of the audited report and accounts of Vitafoam Nigeria for the year ended September 30, 2024 released at the Nigerian Exchange (NGX) showed that group net assets rose by 47 per cent from N17 billion in 2023 to N25 billion in 2024. Gross profit jumped from N17 billion to N30 billion. Earnings before interest, tax , depreciation and amortisation (EBTIDA) also rose from N7.9 billion in 2023 to N8.3 billion in 2024.
However, with forex loss of N12.7 billion, profit before tax declined from N6 billion in 2023 to N1.145 billion in 2024. Although the operating profit increased from N6.9 billion to N7.6 billion, this was moderated by the huge finance cost of N7.1 billion which depressed the profit before taxation to N1.1 billion in 2024 as against N6 billion in 2023.
Adeniyi had said the company was taking proactive measures to address current challenges and ensure sustained profitability.
He said the company remains committed to delivering values despite the challenges in the operating environment.
“Vitafoam has always navigated challenging environments before and emerged stronger. We are taking proactive measures to mitigate current challenges and capitalize on emerging opportunities. Our focus remains on delivering sustainable value to our shareholders, customers, and stakeholders.
“We are working diligently to improve operational efficiency. Our diversified product portfolio will drive future growth. Our innovative products and strategic investments will enhance competitiveness,” Adeniyi said.
He outlined that more than 95 per cent of Vitafoam’s sales are made in Nigeria through its diversified businesses consisting of six active subsidiaries. Vitafoam Group includes Vitafoam Sierra Leone Ltd, Vitapur Nigeria Ltd, Vitablom Nigeria Ltd, Vitavisco Nigeria Nigeria Ltd, Vono Funiture Products Ltd and Vitaparts Nigeria Ltd.