Nigerian companies, including Dangote Cement, MTN Nigeria, BUA Cement, BUA Foods, Nigerian Breweries, Nestlé Nigeria, Dangote Sugar, Seplat Energy, Aradel Holdings, and Lafarge Africa, endured significant financial pressure in 2024, as interest expenses soared to record levels, driven by the Central Bank of Nigeria’s (CBN) tight monetary policy and rising debt exposure.
The CBN’s sustained benchmark interest rate hikes, aimed at curbing inflation and ensuring real positive returns, pushed borrowing costs to new highs, placing a major strain on corporate earnings.
An analysis of 2024 audited financial statements from 10 publicly listed companies—including Dangote Cement, MTN Nigeria, BUA Cement, BUA Foods, Nigerian Breweries, Nestlé Nigeria, Dangote Sugar, Seplat Energy, Aradel Holdings, and Lafarge Africa—reveals that these firms collectively incurred N1.416 trillion in interest expenses, representing a staggering 146% year-on-year increase.
More tellingly, these expenses amounted to 36% of their combined operating profit of N3.93 trillion, underscoring the growing weight of debt servicing on business performance.
Although elevated interest rates were a major driver, many companies also significantly ramped up their borrowing. Their combined loan book grew by 58.6%, from N5.12 trillion in 2023 to N8.12 trillion in 2024.
Company-by-Company Breakdown
Nigerian Breweries – N98.01 billion
Interest expenses rose slightly by 0.28% to N98.01 billion, but still surpassed operating profit by 40%.
Its interest coverage ratio fell from 1.22x to 0.71x, as a foreign exchange loss of N158 billion pushed pre-tax losses to N182.9 billion, up from N145.2 billion in 2023.
Nestlé Nigeria Plc – N101.82 billion
Nestlé’s interest expenses jumped 169% year-on-year to N101.82 billion, as its loan obligations surged from N402.32 billion to N653.70 billion.
Interest costs consumed over 60% of operating profit, while a N291 billion forex loss resulted in a N221.59 billion pre-tax loss, more than doubling the N104.03 billion loss in 2023.
Debt-to-asset ratio climbed to 76%, with the interest coverage ratio dropping to 1.67x.
Seplat Energy – N127.00 billion
Seplat’s interest expenses rose due to new facilities including a $350 million RCF and a $300 million APF, expanding its loan book to N2.10 trillion (from N679.4 billion).
Despite this, Seplat posted an improved interest coverage ratio of 5.10x (from 4.08x), with interest costs representing just 19.6% of operating profit.
Earnings per share surged 316% to N386.61, although share price remained flat at N5,700 as of December 2024.
MTN Nigeria – N422.94 billion
MTN recorded N422.94 billion in interest expenses (including N250.87 billion in lease-related costs), consuming 54% of operating profit.
Even though total debt dropped 17% to N972.92 billion, interest rates spiked to as high as 35%, dragging down the interest coverage ratio to 1.84x (from 3.39x).
A massive N925.36 billion forex loss contributed to a N550 billion pre-tax loss, though the stock recovered with a 22.5% YTD gain as of April 10, 2025.
Dangote Cement – N448.08 billion
Posting the highest interest expense of the group, Dangote Cement incurred N448.08 billion, a 210% increase from the previous year.
Its borrowings jumped by N1.54 trillion, totaling N2.51 trillion, with interest rates rising from 17% to over 25%.
Consequently, its net debt-to-equity ratio surged from 0.30 to 0.95, while its interest coverage ratio fell to 2.57x (from 5.08x).
Other Notable Firms
- Dangote Sugar Refinery: N92.37 billion
- BUA Cement: N56.11 billion
- BUA Foods: N29.91 billion
- Aradel Holdings: N22.21 billion
- Lafarge Africa (WAPCO): N17.89 billion
Outlook: Rising Rates, Rising Risks
The year 2024 underscored the vulnerability of Nigerian corporates to macroeconomic shocks, particularly high interest rates and currency volatility. While firms like Seplat Energy have weathered the storm through strong earnings, others—especially in the consumer goods sector—have struggled under the twin burden of foreign exchange losses and heavy debt servicing.
As interest rates remain elevated in 2025, companies with weaker cash flows, lower interest coverage ratios, and higher leverage are expected to face continued pressure. For investors, this highlights the importance of assessing interest coverage, debt-to-equity ratios, and FX exposure when evaluating company fundamentals in Nigeria’s increasingly complex economic environment.
