A report has shown that Nigerian companies in the consumer goods, cement, and telecommunication sectors are projected to grow fastest through consistent balance sheet restructuring and de-leveraging exercises in 2025.
The CardinalStone’s 2025 economic outlook report revealed that de-leveraging exercises, which started in 2024, are expected to continue in 2025 among companies looking to recover from reform-induced pressures and strategically de-risk their businesses from future FX and interest rate uncertainties.
According to Investopedia, balance sheet restructuring refers to an action taken by a company to significantly modify its financial and operational aspects, usually when the business is facing financial pressures.
De-leveraging exercises occur when a company attempts to decrease its total financial leverage to pay off existing debts and obligations on its balance sheet.
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“WAPCO has repaid N26.7 billion in loans and borrowings, leveraging its strong cash position to reduce its liabilities and significantly cut its FX exposure. This restructuring will likely support the company’s dividend per share to N5.35 vs N3.47 in 2024,” the report said.
It added that the Nigerian Breweries recently raised N590.99 billion through a rights issue, which the company plans to use to pay off all external debt and part of its local debt.
However, the report forecasts that this effort is likely to push the company back to profitability in 2025 after 2 years of consecutive losses and also support dividend payments from 2026.
“AIRTEL AFRICA also embarked on de-leveraging after paying all their HoldCo debt earlier in 2024 and gradually reducing OpCo debt,” it highlighted.
According to the report, the year 2025 is likely to benefit from the impact of ongoing or completed corporate actions as companies expect the consolidation of gains from the transactions to generate market excitement in 2025.
“Besides the SEPLAT and ARADEL acquisitions in 2024, PRESCO acquired a 100.0% stake in Ghana Oil Palm Development Company (GOPDC), OANDO is looking to make a special shares distribution to a debt-for-equity swap involving a related entity, and there is legroom for more oil & gas listings in 2025,” the report said.
Also, the banking sector recapitalisation is forecasted as a net positive in the near to medium despite concerns over short-term dilution effects.
“Banks now have enough resources to enlarge interest-earning assets and scale up digital and technology platforms, with the former set to compensate for lower market yields in H2 ’25 and the latter capable of combining with the positive macro backdrop to support fee and commission income.
“Nonetheless, the expected relative stability of the exchange rate suggests that banks may record lower fair value gains on derivatives, potentially reducing the growth of non-interest earnings,” the report said.
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