US consumer goods powerhouse Procter & Gamble (P&G) has announced on Tuesday that it will stop producing goods in Nigeria and focus solely on imports.
P&G, which has operations in about 180 nations, had manufactured a variety of goods for the Nigerian market, such as Gillette shaving sticks, Ariel detergent, Pampers, and Always sanitary pads.
As reported by Nairametrics, the Chief Financial Officer of the group Andre Schulten stated this during his presentation at the Morgan Stanley Global Consumer & Retail Conference.
The company attributed its strategic decision to Nigeria’s macroeconomic conditions and mentioned difficulties in operating as a dollar-denominated organisation.
Schulten said:
“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.
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Nigeria provides the company with $50 million in net sales, according to the Chief Financial Officer (CFO). The Chief Financial Officer anticipates no major effect on the group’s balance sheet concerning sales or profitability, given the company’s $85 billion total portfolio value.
P&G has always struggled with the state of the economy. The company, which had dominated the rapidly evolving consumer goods market for decades, has had difficulty gaining traction in recent years. One year after its opening, P&G announced plans to close its $300 million Nigerian production facility in 2018, according to Premium Times.
The company reduced its operations in the nation and laid off employees in 2021. It declared at the time that it had no intention of leaving 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 declared its intention to leave Nigeria’s home care and skin cleansing markets in search of a more lucrative and long-term business plan.
Similarly, after more than 51 years in the Nigerian market, GlaxoSmithKline UK, a significant player in the pharmaceutical industry, left the country due to issues with foreign exchange, security, and high operating costs.
Additionally, in October, Guinness Nigeria Plc announced that it would no longer be importing or selling premium spirit brands from abroad, such as Baileys, Singleton, Johnnie Walker, 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.
