Debt Surge Hits Nigeria’s Top Companies: N6.2 Trillion in Q1 2025 Alone
Detailed Breakdown of the News:
Headline Insight:
Nigeria’s 12 most valuable non-financial listed companies, all with market capitalisation above ₦1 trillion, have seen their combined debt jump by 30%, rising to ₦6.2 trillion in Q1 2025, from ₦4.8 trillion a year earlier.
Key Drivers Behind the Debt Spike:
• Inflation: Rising costs of goods and services are inflating operational expenses.
• Naira Depreciation: The local currency lost over 60% of its value since it was floated in 2023, now trading around ₦1,500/$.
• High-Interest Rates: CBN’s Monetary Policy Rate (MPR) remains at 27.5%, keeping borrowing costs elevated.
• Dollar-Denominated Loans: Many companies borrowed in dollars. As the naira weakens, the naira value of these loans increases significantly—even if the actual dollar amount hasn’t changed.
The 12 Most Affected Companies (as of June 5, 2025):
• BUA Foods
• Dangote Cement
• MTN Nigeria
• Seplat Energy
• Geregu Power
• BUA Cement
• Transcorp Power
• Nigerian Breweries
• International Breweries
• Lafarge Africa
• Transcorp Hotels
• Nestle Nigeria
Combined Market Cap: ₦40.8 trillion
Firm-Level Highlights:
1. Dangote Cement
• Debt: ₦2.26 trillion (+91.5%)
• Interest Expense: ₦110 billion (highest among peers)
• Net Profit: ₦209 billion
• EPS: ₦12.9
• Debt-to-Equity Ratio: 55.6%
• Net Profit Margin: 20.9% (up from 13.8%)
2. MTN Nigeria
• Debt: ₦1.14 trillion (+23.7%)
• Interest Expense: Down to ₦44 billion (from ₦48bn)
• FX Loss: ₦5.52 billion (down from ₦656bn)
• Net Profit: ₦133 billion — first profit since 2023
3. Seplat Energy
• Debt: ₦1.08 trillion (+49.7%)
• Interest Expense: +11%
• Revenue: ₦1.228 trillion (from ₦268.6bn YoY)
• Gross Profit: ₦535.4 billion
• Actions: Repaid $250 million early, reduced RCF to $100m, raised dividend to US 4.6 cents/share
4. Nestle Nigeria
• Debt: ₦604 billion
• Interest Expense: Fell by 14% due to currency stability
• Q1 Net Profit: ₦30.2 billion (vs. ₦142.7bn loss last year)
• Revenue: ₦294.9 billion (+61%)
• Growth Drivers: Strong demand for Maggi, Milo, Golden Morn, and Nescafé
5. BUA Cement
• Debt: ₦494 billion (+19%)
• Debt-to-Equity Ratio: 105%
• Profit After Tax: +351.4% YoY
• Revenue Growth: 80.5%, aided by infrastructure and government contracts
Broader Outlook & Investor Sentiment:
• According to the CBN’s May 2025 Business Expectations Survey:
• 23.9% of firms expect the naira to appreciate in the next 6 months
• Down from 26.3% last month
• Only 8.2% expect naira appreciation in the next one month
• On June 4, the naira hit a 2-month high of ₦1,565.46/$
• Many firms anticipate a decline in borrowing costs in the next six months
Analyst Reactions:
Nabila Mohammed (Chapel Hill Denham):
“Debt appears to rise due to naira devaluation more than fresh borrowing.”
Abimbola Adewale (Independent Analyst):
“Firms with heavy dollar loans are now facing elevated repayment risk and tighter cash flows.”
Bottom Line for Investors & Stakeholders:
The debt surge among Nigeria’s top-tier companies paints a picture of how macroeconomic stress — particularly currency instability and interest rate pressures — are reshaping corporate balance sheets.
However, several firms are showing resilience, improving profits, and reducing exposure through strategic repayments and operational efficiencies.
⚠️ Caution is warranted, especially for investors tracking debt-laden stocks with foreign currency exposure — but opportunities remain in companies that are adapting and hedging wisely.
Detailed Breakdown of the News:
Headline Insight:
Nigeria’s 12 most valuable non-financial listed companies, all with market capitalisation above ₦1 trillion, have seen their combined debt jump by 30%, rising to ₦6.2 trillion in Q1 2025, from ₦4.8 trillion a year earlier.
Key Drivers Behind the Debt Spike:
• Inflation: Rising costs of goods and services are inflating operational expenses.
• Naira Depreciation: The local currency lost over 60% of its value since it was floated in 2023, now trading around ₦1,500/$.
• High-Interest Rates: CBN’s Monetary Policy Rate (MPR) remains at 27.5%, keeping borrowing costs elevated.
• Dollar-Denominated Loans: Many companies borrowed in dollars. As the naira weakens, the naira value of these loans increases significantly—even if the actual dollar amount hasn’t changed.
The 12 Most Affected Companies (as of June 5, 2025):
• BUA Foods
• Dangote Cement
• MTN Nigeria
• Seplat Energy
• Geregu Power
• BUA Cement
• Transcorp Power
• Nigerian Breweries
• International Breweries
• Lafarge Africa
• Transcorp Hotels
• Nestle Nigeria
Combined Market Cap: ₦40.8 trillion
Firm-Level Highlights:
1. Dangote Cement
• Debt: ₦2.26 trillion (+91.5%)
• Interest Expense: ₦110 billion (highest among peers)
• Net Profit: ₦209 billion
• EPS: ₦12.9
• Debt-to-Equity Ratio: 55.6%
• Net Profit Margin: 20.9% (up from 13.8%)
2. MTN Nigeria
• Debt: ₦1.14 trillion (+23.7%)
• Interest Expense: Down to ₦44 billion (from ₦48bn)
• FX Loss: ₦5.52 billion (down from ₦656bn)
• Net Profit: ₦133 billion — first profit since 2023
3. Seplat Energy
• Debt: ₦1.08 trillion (+49.7%)
• Interest Expense: +11%
• Revenue: ₦1.228 trillion (from ₦268.6bn YoY)
• Gross Profit: ₦535.4 billion
• Actions: Repaid $250 million early, reduced RCF to $100m, raised dividend to US 4.6 cents/share
4. Nestle Nigeria
• Debt: ₦604 billion
• Interest Expense: Fell by 14% due to currency stability
• Q1 Net Profit: ₦30.2 billion (vs. ₦142.7bn loss last year)
• Revenue: ₦294.9 billion (+61%)
• Growth Drivers: Strong demand for Maggi, Milo, Golden Morn, and Nescafé
5. BUA Cement
• Debt: ₦494 billion (+19%)
• Debt-to-Equity Ratio: 105%
• Profit After Tax: +351.4% YoY
• Revenue Growth: 80.5%, aided by infrastructure and government contracts
Broader Outlook & Investor Sentiment:
• According to the CBN’s May 2025 Business Expectations Survey:
• 23.9% of firms expect the naira to appreciate in the next 6 months
• Down from 26.3% last month
• Only 8.2% expect naira appreciation in the next one month
• On June 4, the naira hit a 2-month high of ₦1,565.46/$
• Many firms anticipate a decline in borrowing costs in the next six months
Analyst Reactions:
Nabila Mohammed (Chapel Hill Denham):
“Debt appears to rise due to naira devaluation more than fresh borrowing.”
Abimbola Adewale (Independent Analyst):
“Firms with heavy dollar loans are now facing elevated repayment risk and tighter cash flows.”
Bottom Line for Investors & Stakeholders:
The debt surge among Nigeria’s top-tier companies paints a picture of how macroeconomic stress — particularly currency instability and interest rate pressures — are reshaping corporate balance sheets.
However, several firms are showing resilience, improving profits, and reducing exposure through strategic repayments and operational efficiencies.
⚠️ Caution is warranted, especially for investors tracking debt-laden stocks with foreign currency exposure — but opportunities remain in companies that are adapting and hedging wisely.