Nigeria’s companies are set to use their renewed profits to rebuild their balance sheets and fuel growth after a bruising 2024, reports Bloomberg.
“With improving macroeconomic and market conditions, more firms are likely to pursue rights issues” or reinvest earnings to strengthen their balance sheets, said Segun Tunmbi, senior equity research analyst at CSL Stockbrokers, citing companies including Nestle Nigeria Plc and PZ Cussons Plc.
Steep naira devaluations since mid-2023 sent the value of foreign-currency corporate debts soaring when converted to the local unit, pushing borrowing above assets and driving many firms into negative equity. At the same time, higher naira interest payments eroded earnings.
Read also: How Nigeria’s biggest companies performed in half-year 2025
“Many of these firms have now returned to profitability, supported by sustained revenue growth,” tighter cost controls, declining FX losses, and strategic efforts to limit currency exposure and rebuild balance sheets, Tunmbi said via email.
They include MTN Nigeria Communications Plc, which has already used part of its profits to cut negative shareholders’ equity to 42.5 billion naira ($29 million) as of June, from 458 billion naira at the end of last year, and Dangote Sugar Refinery Plc.
“There is a need for the firms to close the negative position, because it’s not good for their valuation,” said Philip Anegbe, head of investment research at CardinalStone Partners Ltd., by phone. “The overall business environment is positive, so people are likely to embrace any decision they make to close negative equity, through rights issue or using profit.”