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Guinness Nigeria has reported a massive N18.1 billion loss for the year ended June 2023 as higher finance costs as a result of naira devaluation wiped out its operating profit.
Guinness recorded unrealised foreign exchange losses of N45.95 billion for the period, as exchange difference on foreign currency surged.
Exchange difference on foreign currency letter of credits surged to N19.6 billion, while exchange difference on foreign currency intercompany loan increased by 3,986% to N8.05 billion from N197.4 million in the earlier period.
Guinness Nigeria’s loss on remeasurement of other foreign currency balances also jumped 1,753% to N21.44 billion in the period, from N1.157 billion in June 2020.
A foreign exchange gain/loss occurs when a company buys and/or sells goods and services in a foreign currency, and that currency fluctuates relative to their home currency.
The difference in the value of the foreign currency, when converted to the local currency of the seller, is called the exchange rate. If the value of the home currency increases after the conversion, the seller of the goods will have made a foreign currency gain.
However, if the value of the home currency declines after the conversion, the seller will have incurred a foreign exchange loss.