Major businesses in the country have blamed Naira scarcity, inflation and the just concluded general elections for the rise in operating expenses in the first quarter of 2023.
A review of the first quarter 2023 income statement of 24 of the NSE 30 companies reveals a total operating expense of about N441.8 billion compared to N386.6 billion for the same period in 2022. Input costs, otherwise called the cost of sale, also rose 3.9 per cent to N1.154 trillion.
Dangote Cement, Africa’s market Cement leader, reported marketing and distribution expenses of N68.7 billion, up from N60.6 billion a year earlier (N41 billion in 2021).
The company CEO, Arvind Pathak, cited elections as a major factor that hit their revenue growth during the quarter.
“The uncertainty and sentiments around the Nigerian elections stalled economic activities, with many private and public projects on hold until the outcome of the elections. Collectively, this negatively impacted the volume of cement sales and limited our ability to maximize production during the period.”
They also cited the naira scarcity and the increase in diesel prices as major cost drivers during the quarter.
MTN, Nigeria’s largest telecom, also cited the naira scarcity, elections, and inflation as major cost pressures during the quarter.
The company’s marketing and distribution expenses rose from N21.7 billion to N36.1 billion in 2023. Admin expenses also rose from N11.3 billion to N13.5 billion in the first quarter of 2023.
According to the MD/CEO of MTN Nigeria, Karl Toriola, the company has continued to experience headwinds in its operating environment in the first quarter of 2023.
“The impacts of the ongoing global macroeconomic and geopolitical developments on energy, food, and general inflation were exacerbated locally by petrol and cash shortages experienced during the period.
MTN also reported a lower operating profit margin in the quarter under review, eking out N36 for N100 of revenue compared to N38 in the same period in 2022. They also reported a lower profit margin in the first quarter of 2023.
Another mega Nigerian company, Nigeria Breweries, also complained about cash shortages and elections as a major drawback on margins. The company reported operating expenses of N42 billion compared to N39.5 billion in the same period in 2022.
