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New loss in Nigeria for FrieslandCampina

May 28, 2024 - Wouter Baan

The overseas activities of FrieslandCampina had a negative impact on the annual figures last year and that trend is temporarily continuing in 2024. The activities of FrieslandCampina's Nigerian subsidiary have been far from rosy lately. In the first quarter, Wamco - as the company is called - once again incurred a substantial multimillion loss.

In the first quarter, Wamco recorded a loss of 10.2 billion Nigerian Naira, equivalent to €6.3 million. In the same period last year, the loss in euros was even more than €20 million, but this year the pain is somewhat alleviated by the sharp devaluation of the currency in the West African country. In Naira, the loss was about the same.

The turnover increased in the past quarter compared to a year earlier by almost 30% to €62 million, although this is likely mainly due to the high inflation in the country.

Country in crisis
This largely explains the problems faced by FrieslandCampina's subsidiary, as Nigeria is experiencing a persistent economic crisis accompanied by high inflation. In 2023, the company also incurred losses after a series of better years - based on the current exchange rate, this amounted to around €14 million. Additionally, some significant write-downs had to be made on the balance sheet last year.

The high inflation means that the sales volumes are said to be substantially under pressure. CEO Jan Derck van Karnebeek pointed out in the 2023 annual report that Western consumers sometimes switch to cheaper private labels due to inflation, but in countries like Nigeria, it is questionable whether people can afford dairy products at all. Since the beginning of this year, Wamco has appointed a new director in the hope of turning the tide, although the market conditions are challenging.

Pakistan
Not only in Nigeria, but also the Pakistani subsidiary FrieslandCampina Engro Pakistan Limited is performing disappointingly. In the first quarter, revenues took a significant hit, although they did not quite fall into the red.

Wouter Baan

Wouter Baan is the editor-in-chief of Farmerbusiness and a market specialist in dairy, pork, and meat at DCA Market Intelligence. He also tracks developments within the agribusiness sector and conducts interviews with CEOs and policymakers.
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