In 2024, Nigerian companies navigated a turbulent financial landscape as rising interest expenses (fueled by the Central Bank of Nigeria’s (CBN) sustained monetary tightening) erased profitability and intensified debt-servicing burdens.
The CBN’s hawkish monetary stance, aimed at curbing inflation and ensuring positive real returns, triggered successive increases in the Monetary Policy Rate (MPR). As a result, borrowing costs for businesses spiked across the board.
An in-depth analysis of the 2024 audited financial reports of 10 major 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 the scale of the challenge.
These firms collectively incurred ₦1.416 trillion in interest expenses, a 146% year-on-year increase. This accounted for 36% of their total operating profit of ₦3.93 trillion, emphasizing the growing weight of debt servicing on earnings. Additionally, these companies expanded their total borrowings significantly, with their combined loan book growing by 58.6%, from ₦5.12 trillion in 2023 to ₦8.12 trillion in 2024.
Company-Level Breakdown
Nigerian Breweries – ₦98.01 Billion Interest Expense
Despite a modest 0.28% increase in interest expenses, these costs outweighed the company’s operating profit by 40%. Its interest coverage ratio fell from 1.22x to 0.71x, while foreign exchange losses of ₦158 billion contributed to a pre-tax loss of ₦182.9 billion, up from ₦145.2 billion in 2023.
Nestlé Nigeria – ₦101.82 Billion Interest Expense
Nestlé’s finance costs surged by 169%, driven by a steep rise in debt from ₦402.32 billion to ₦653.70 billion. Interest expenses consumed over 60% of operating profit. With FX losses hitting ₦291 billion, the company posted a pre-tax loss of ₦221.59 billion, compared to ₦104.03 billion in 2023. Its debt-to-asset ratio rose to 76%, and interest coverage dipped to 1.67x.
Seplat Energy – ₦127.00 Billion Interest Expense
Seplat’s exposure grew due to two major credit facilities: a $350 million Revolving Credit Facility and a $300 million Advance Payment Facility, expanding its loan book from ₦679.4 billion to ₦2.10 trillion. However, the company’s strong operational performance resulted in an interest coverage ratio of 5.10x (up from 4.08x), with finance costs comprising just 19.6% of operating profit. Earnings per share jumped by 316% to ₦386.61, even as its share price remained flat.
MTN Nigeria – ₦422.94 Billion Interest Expense
MTN posted one of the highest finance costs, with ₦250.87 billion stemming from lease obligations. Despite a 17% reduction in debt, higher interest rates (12.7%–35%) led to rising costs. Its interest coverage ratio declined from 3.39x to 1.84x, and foreign exchange losses of ₦925.36 billion resulted in a pre-tax loss of ₦550 billion. However, investor sentiment recovered, with the stock climbing 22.5% year-to-date as of April 10, 2025.
Dangote Cement recorded the highest interest expenses in the group, a 210% increase, driven by increased borrowing and elevated rates (from 17% to over 25%). Its debt rose from ₦970 billion to ₦2.51 trillion, pushing the net debt-to-equity ratio from 0.30 to 0.95. Its interest coverage ratio declined from 5.08x to 2.57x.
Other Companies Under Pressure include; Dangote Sugar Refinery: ₦92.37 billion, BUA Cement: ₦56.11 billion, BUA Foods: ₦29.91 billion, Aradel Holdings: ₦22.21 billion as well as Lafarge Africa (WAPCO): ₦17.89 billion.
These companies particularly in the consumer goods segment were also hit by severe foreign exchange losses, increasing the impact of high interest expenses.
The 2024 fiscal year emphasized the vulnerabilities of Nigerian corporates in a high-interest environment. While firms like Seplat Energy demonstrated resilience through strong cash flows and operational efficiency, others especially in the FMCG space have struggled to absorb the dual shocks of debt servicing and currency volatility.
With interest rates expected to remain high in the near term, businesses with high leverage and weak earnings may face continued financial strain. For investors and analysts, tracking interest coverage ratios, net debt levels, and exchange rate exposure will be critical in assessing corporate health going forward.
