FX variation boosts CEOs’ salary amid companies’ poor performance

FX variation boosts CEOs’ salary amid companies’ poor performance

YEAR 2020 was no doubt a tough year for businesses in Nigeria and across the world with the attendant effects of COVID-19 pandemic disruptions in economic activities.

This was as the global economy was hit by the worldwide lockdown on movements and restrictions with policies that affected and discouraged investments.

Unfortunately, the impact of COVID-19 has continued amidst governments’ concerted efforts to reset the economy.

Against this backdrop, the performance of many companies was impacted by the pandemic, which had wider effect on FX in Nigeria.

Low oil prices, constrained consumer demands due to liquidity squeeze, and lack of social interactions also contributed to the dire forex situation.

In addition, there were civil unrest and heightened insecurity. There was a steady rise in inflation in the year; real GDP contracted by 6.1 per cent and 3.6 per cent Year-on-Year in the second and third quarters of the year.

Consumer companies listed on the Nigerian Exchange Limited (NGX) were not exempted as reports from their financial statement for the year ended 2020 was reflective of the harsh reality, with companies recording a decline in their profits while a few reported loss.

Having foreseen the circumstance, some companies alerted their investors of the possible decline or loss in their financials.

Management of Guinness Nigeria had warned its investors that their result for the year ended June 2020 would be bad, noting that adverse impact of the sharp contraction in economic activities and the knock-on effect of the COVID-19 lockdown took a toll on the on-trade segment of the business across all its markets, with production and revenues being negatively affected.

Many companies took proactive measures to stay afloat among which was asset impairment, increase in retail prices of goods, and laying off of staff, among others. Nestlé Nigeria Plc suffered a N6.5 billion or 14 per cent profit drop in 2020, closing the year with an after tax profit of N39 billion, the lowest in three years.

The company’s audited financial report for the 2020 operations shows that inability to grow revenue or cut costs was the management’s challenge in the year. Unilever Nigeria Plc, a leading consumer goods company declared in its unaudited annual financial report that it made a loss amounting to N1.59 billion in the year 2020, while its revenue increased to N61.57 billion, up by 1.34 per cent when compared to Year 2019.For Dangote Sugar Refinery, earnings for the year 2020 were limited by a spike in […]

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