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Lafarge Africa has reported a hefty loss before tax for the 2016 financial year owing to higher foreign exchange losses arising from the devaluation of the naira. The cement company said loss before tax stood at N22.82 billion, compared to pre-tax profit of N29.29 billion in the previous year, according to a statement released this week.

Lafarge Africa said FX losses rose to N22.7 billion in 2016 compared to N8.43 billion a year earlier. The FX losses resulted from the impact of the devaluation of the naira on foreign currency borrowings worth $385 million. The loans relate to Lafarge’s fully-owned subsidiary, Calabar-based United Cement Company of Nigeria (Unicem), which was acquired from Flour Mills of Nigeria for N55 billion in 2015.

The cement company’s revenue fell by 18 percent to N219.71 billion as against N267.23 billion in 2015. The company said cement sales declined due mainly to production outages caused by prolonged gas shortages in Nigeria.

“Our immediate objective is to deliver fully on our turnaround plan by optimizing our processes, developing our alternative fuel strategy, reducing operational costs to deliver strong EBITDA margins returning to historic levels,” said Michel Puchercos, Lafarge Africa’s CEO.

Notwithstanding its operating losses, Lafarge Africa reported an after-tax profit of N16.99 billion due mainly to an income tax credit of N39.7 billion generated from deferred tax assets at its Unicem operations. The company posted an after-tax profit of N27.16 billion in 2015.

According to Investopedia, a deferred tax asset is an asset on a company’s balance sheet that may be used to reduce taxable income in the future. The difference of the amount paid in taxes to the government and the amount recorded in the financial statements is considered a deferred tax asset.

Founded in 2014, Lafarge Africa is the second largest cement company in Nigeria after Dangote Cement, the market leader. The company controls four cement companies in Nigeria: LafargeWapco, based in Ogun State; AshakaCem, based in Gombe State; Atlas Cement, based in Rivers State; and Unicem, based in Cross River State. The company also owns Lafarge South Africa Limited.

Lafarge Africa is a subsidiary of the global building materials company, LafargeHolcim, formed in 2015, following the $50 billion merger of Lafarge – the French cement manufacturer – and Holcim – a Swiss-based building materials company.