Flour Mills of Nigeria Plc, the West African nation’s biggest miller, reported its first loss in about four years as naira’s depreciation increased the company’s cost of servicing overseas loans.

The Lagos-based company reported a loss of 10.2 billion naira ($13.2 million) in the three months to June 30, compared with a profit of 5.63 billion naira a year ago, according to a regulatory filing. The firm posted a foreign-exchange loss of 22.5 billion naira.

“Without the devaluation of the exchange rate, the operating profit would have increased by 52%,” Flour Mills said.

Six of the nation’s biggest companies announced a combined loss of $385 million early in the year after revaluing overseas loans and letters of credit following the naira’s 40% plunge. Nigeria’s government in mid-June allowed the currency to weaken as part of measures to attract overseas inflows and help revive the struggling economy.

Flour Mills said its finance costs doubled to 16.63 billion naira. Revenue rose 34% to 456.38 billion naira.

Still, the company’s shares surged 10% as of 2.30 p.m in Lagos, heading for their biggest gain since March 2021. Trading volume was seven times the average for the time of the day, according to data compiled by Bloomberg.

Flour Mills look relatively undervalued compared to other food companies, Ayodeji Ajilore, analyst at ARM Investment Managers in Lagos said by phone. “Also, investors think the risk of foreign exchange (loss) has materialized for the company; so they don’t expect it to degenerate.”

Bloomberg