The Nigerian corporate landscape witnessed a significant shift in debt burdens as of December 2024, with eight prominent companies experiencing substantial fluctuations in their liabilities. Oando Plc, a major player in the energy sector, led the pack with a staggering 164.95% surge in total liabilities, reaching N7.78 trillion. This massive increase underscores the company’s growing financial obligations, encompassing both short-term and long-term debts. The bulk of Oando’s liabilities, N6.56 trillion, falls under current liabilities, primarily trade payables and borrowings due within the next year. The remaining N1.22 trillion constitutes non-current liabilities, representing longer-term obligations such as borrowings, deferred taxes, and retirement benefit provisions. This substantial increase in liabilities raises concerns about Oando’s financial stability and its ability to meet its obligations in the coming years.
Conversely, Bua Foods, a prominent player in the food processing industry, presented a contrasting picture, showcasing a 23.5% decrease in total liabilities, settling at N618.87 billion. This reduction reflects a more prudent financial approach, possibly indicating a strategy to deleverage and strengthen the company’s financial position. Bua Foods’ liabilities comprise N22.31 billion in deferred tax liabilities and a substantial N724.12 billion in borrowings categorized as non-current. Current liabilities, totaling N432.46bn, primarily encompass short-term borrowings and trade payables. This decrease in liabilities suggests a healthier financial outlook for Bua Foods compared to its debt-laden counterpart, Oando.
Honeywell Flour Mills and Caverton Offshore experienced increases in their liabilities, albeit at different magnitudes. Honeywell Flour Mills witnessed a modest 8% rise, reaching N136.21 billion, primarily driven by current liabilities such as trade payables. Caverton Offshore, on the other hand, recorded a more significant 30.6% jump in liabilities, reaching N104.5 billion. This surge was largely fueled by a substantial increase in current liabilities, particularly trade payables, which grew by an alarming 90.72% from the previous year. This substantial increase may indicate potential challenges in managing short-term financial obligations for Caverton Offshore.
Among the other companies analyzed, SCOA Nigeria, ABC Transport, Triple Gee, and Learn Africa Plc all experienced varying degrees of increase in their liabilities. SCOA Nigeria reported a modest 7.2% rise, while ABC Transport saw a more substantial 28.8% increase. Triple Gee mirrored this trend with a similar 28.9% climb in liabilities, largely attributed to both long-term and short-term borrowings. Learn Africa Plc recorded the most significant percentage increase among this group, with a 66.4% surge in liabilities, primarily driven by current liabilities such as trade payables and income tax payable. These increases, while varying in magnitude, highlight the diverse financial pressures faced by companies across different sectors of the Nigerian economy.
The collective rise in liabilities across these companies signals a potential trend of increasing debt burdens within the Nigerian corporate landscape. While some companies managed to reduce their debt, the overall picture suggests a growing reliance on borrowed capital, which could have implications for long-term financial stability and growth. The significant increase in current liabilities for several companies is particularly noteworthy, as it indicates potential challenges in managing short-term financial obligations.
This analysis of individual company liabilities is further contextualized by the broader trend observed in the Nigerian Exchange. As of September 2024, fifteen listed companies reported a combined debt of N3.62 trillion under non-current liabilities, representing a notable increase from N2.74 trillion in 2023. This escalating trend of long-term debt accumulation underscores the growing reliance on external financing within the Nigerian corporate sector. The underlying reasons for this increased borrowing could include expansion plans, capital investments, or attempts to navigate challenging economic conditions. However, this reliance on debt financing, while potentially beneficial in the short term, carries inherent risks if not managed effectively. Excessive debt levels can lead to financial distress, impacting a company’s ability to invest in future growth and potentially hindering its long-term prospects. The observed increase in both individual company liabilities and the broader trend on the Nigerian Exchange warrants careful monitoring and analysis to assess the potential long-term implications for the Nigerian economy.
