Flour Mills of Nigeria Plc, the country’s biggest miller by market value, said manufacturers in Africa’s most populous country are finding profits under pressure from a fall in crude prices, a weak naira and rising input costs, reports Bloomberg.

“Taken together, these factors have contributed to a perfect storm,” Chairman John Coumantaros told investors at a meeting in the commercial hub, Lagos, on Thursday. Flour Mills was able to “offset the impact” of the challenges “through commensurate increases in the selling prices of its products,” Coumantaros said.

A fall in oil prices from 2014 that cut government revenue prompted the Central Bank of Nigeria to peg the naira at N197-N199 to the dollar for 15 months in a bid to conserve reserves and cap price increases. The move, which caused a scarcity of dollars, crippled imports and increased costs for industries. It also led to the exit of foreign investors who are yet to return, almost three months after authorities allowed the naira to trade freely.

The country’s gross domestic product contracted by 2.1 percent in the three months through June from a year earlier, while inflation accelerated to 17.1 percent in July, the highest rate since October 2005.

Expectations that dollars would become available to manufacturers after the central bank abandoned its peg have been dashed, Paul Gbededo, the company’s managing director, said in separate interview. “The aspiration is that once you devalue, the people will bring in their dollars; that we are not seeing yet,” he said. “Nigeria is badly hit with foreign-exchange earnings, thereby not being able to fulfil its import bill.”

Nigerian companies will need to increase prices to remain profitable, according to Gbededo. “For those who are import-dependent, you have to see an increase in price, tracking the foreign exchange issues,” he said.

Flour Mills is issuing N40 billion of shares through a staged process instead of a one-off initially planned as the country’s “economic headwinds,” limit the ability of investors to buy securities, Coumantaros said. (Independent)

•Photo shows Investment Minister Okechukwu Enelamah.

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