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.