Nigerian companies faced financial pressure in 2024 as surging interest expenses, driven by the Central Bank of Nigeria’s (CBN) sustained monetary tightening, squeezed their bottom lines.
The apex bank’s aggressive hike of the benchmark interest rate, intended to tame inflation and ensure positive real returns, has had a pronounced effect on the cost of borrowing for the private sector.
An analysis of 2024 audited financial statements from 10 Nigerian companies listed across key sectors, including heavyweights like Dangote Cement, MTN Nigeria, BUA Cement, BUA Foods, Nigerian Breweries, Nestlé Nigeria, Dangote Sugar, Seplat Energy, Aradel Holdings, and Lafarge Africa, highlights just how burdensome interest expenses have become.
Collectively, these firms reported interest expenses totaling N1.416 trillion, representing a 146% year-on-year increase.
More striking is the fact that this figure amounts to 36% of their combined operating profit of N3.93 trillion, accentuating the growing weight of debt servicing on corporate profitability.
Although higher interest rates played a major role in this surge, many of the companies also significantly expanded their debt exposure.
Their total loan book rose by 58.57%, from N5.12 trillion in 2023 to N8.12 trillion in 2024.
Company-by-Company breakdown
Nigerian Breweries – N98.013 billion interest expense
Nigerian Breweries reported interest expenses of N98.01 billion, a marginal increase of just 0.28% from the previous year.
However, these costs still exceeded the company’s operating profit by 40%, placing immense pressure on profitability.
Its interest coverage ratio fell sharply from 1.22x to 0.71x, while a foreign exchange loss of N158 billion dragged the company deeper into the red with a pre-tax loss of N182.9 billion in 2024, up from N145.2 billion in 2023.
Nestle Nigeria Plc – N101. 817 billion interest expense
Nestlé Nigeria saw its interest expenses jump 169% year-on-year to N101.82 billion, driven largely by a spike in its loan obligations, which grew from N402.32 billion in 2023 to N653.70 billion in 2024.
Interest expenses consumed over 60% of operating profit, while a foreign exchange loss of N291 billion compounded the pressure, resulting in a pre-tax loss of N221.59 billion, more than double the N104.03 billion loss in 2023.
Nestlé’s debt-to-asset ratio climbed to 76%, and its interest coverage ratio dropped to 1.67x.
Seplat Energies- N127.003 billion interest expense
Seplat Energy, in contrast, managed to absorb the shock better. Its interest expense rose to N127.00 billion, driven by two new credit facilities: a $350 million Revolving Credit Facility (RCF) and a $300 million Advance Payment Facility (APF).
This expanded its loan book from N679.4 billion in 2023 to N2.10 trillion in 2024.
Despite the higher debt, Seplat’s interest coverage ratio improved from 4.08x to 5.10x, with interest expenses accounting for just 19.6% of operating profit.
This resilience was reflected in a 316% jump in EPS to N386.61, although its share price has remained flat at N5,700 since December 2024.
MTN Nigeria – N422.942 billion interest expense
MTN Nigeria faced one of the most daunting challenges. With interest expenses totaling N422.94 billion, including N250.87 billion in lease-related costs, over 54% of its operating profit was spent on debt servicing.
Despite a 17% decline in its total loan book to N972.92 billion, rising average interest rates (which soared from 12%–18% to 12.7%–35%) drove finance costs higher.
Its interest coverage ratio fell from 3.39x to 1.84x, and foreign exchange losses of N925.36 billion pushed it into a pre-tax loss of N550 billion.
Nonetheless, the stock has recovered, gaining 22.5% year-to-date as of April 10, 2025, after a 24.24% drop in 2023.
Dangote Cement – N448.081 billion interest expense
Dangote Cement reported the highest interest expenses among the group at N448.08 billion, marking a 210% increase from the prior year.
This was the result of both a significant rise in borrowing- loans increased by N1.54 trillion to N2.51 trillion and higher interest rates, which rose from 17% to over 25%.
Consequently, its net debt-to-equity ratio spiked from 0.30 to 0.95, while the interest coverage ratio fell to 2.57x from 5.08x, signaling mounting pressure on its earnings.
Other Companies also feeling the heat
- Dangote Sugar Refinery: N92.37 billion interest expense
- BUA Cement: N56.11 billion interest expense
- BUA Foods: N29.91 billion interest expense
- Aradel Holdings: N22.21 billion interest expense
- Lafarge Africa (WAPCO): N17.89 billion interest expense
The year 2024 has been one of high financial strain for Nigerian corporates, as rising interest rates and a growing appetite for debt converge to create a burdensome interest expense landscape.
For some, like Seplat Energy, strong operating performance has helped mitigate the effect.
However, for many others, particularly consumer goods companies grappling with foreign exchange losses, the combination of debt servicing costs and macroeconomic headwinds has severely dented profitability and investor confidence.
As interest rates remain elevated, companies with weaker cash flows and high leverage will continue to struggle.
For investors, this underlines the importance of monitoring interest coverage ratios, net debt levels, and exchange rate exposure when evaluating company fundamentals in Nigeria’s high-interest environment.
