P&G, which operates in some 180 countries of the world, produces a range of products for the Nigerian market, including Always sanitary pad, Pampers, Ariel detergent, Oral B toothpaste, and Gillette shaving stick.
As reported, the Chief Financial Officer of the group Andre Schulten stated this during his presentation at the Morgan Stanley Global Consumer & Retail Conference.
The company cited challenges in conducting business as a dollar-denominated organization and attributed its strategic decision to the macroeconomic conditions in Nigeria.
According to the Chief Financial Officer, “the other reality that arises in some of these markets is that it gets increasingly difficult to operate and create U.S dollar value. So when you think about places like Nigeria and Argentina, it is difficult for us to operate because of the macroeconomic environment.”
“So with that in mind, we are announcing a restructuring program with the intent to adjust operating model and adjust the portfolio to ensure that we maintain the portfolio discipline that has brought us to this point,”
“The restructuring program will largely focus on Nigeria and Argentina. We’ve announced that we will turn Nigeria into an import-only market, effectively dissolving our footprint on the ground in Nigeria and reverting to an import-only model,” he explained.
The Chief Financial Officer (CFO) revealed that Nigeria contributes $50 million in net sales to the business. Considering the company’s overall portfolio valued at $85 billion, the CFO does not expect any significant impact on the group’s balance sheet in terms of sales or profitability.
P&G’s struggle with the economy is not recent. The firm has struggled in recent years to have a hold in the fast-moving consumer goods market it previously dominated for decades. In 2018, Premium Times reported P&G’s planned shutdown of its $300 million Nigeria production plant, one year after launch.
In 2021, the company laid off workers and considerably downsized its operations in the country. At that time, it stated that it did not have plans to exit Nigeria.
2023 has proven to be exceptionally challenging for Nigerian businesses. The previously struggling economy has faced further difficulties, exacerbated by the implementation of various reforms such as the removal of the fuel subsidy and the naira float by the current government.
The resulting impact is a rise in the cost of living and conducting business in the country, leading to numerous companies downsizing or closing operations in Nigeria.
A few months after Unilever Nigeria announced its exit from the home care and skin cleansing markets in Nigeria to find a more sustainable and profitable business model.
Similarly, GlaxoSmithKline UK, a major player in the pharmaceutical industry, exited the Nigerian market after over 51 years due to challenges like foreign exchange complexities, security concerns, and high operational costs.
In October, Guinness Nigeria Plc also revealed plans to cease the importation and sale of international premium spirit products, including Johnnie Walker, Baileys, Singleton, and others.
The move is expected to decrease its foreign exchange needs, which will help offset the adverse effects of enduring foreign exchange scarcity and fluctuations in exchange rates on its financial performance.
