Foreign-owned companies in Nigeria are scaling back their capital investments as returns on capital employed (ROCE) decline. BusinessDay’s analysis shows a drop in cumulative capital returns from 25% in 9M 2023 to 18% in 9M 2024, reflecting a challenging business environment. While some companies managed to post operating profits, overall financial performance was impacted by foreign exchange-exposed loans. MTN Nigeria, a key player in the telecom sector, saw a 22% decline in operating profit, raising concerns about potential cost-cutting measures and reduced investment.
Sectoral performance varied significantly, with Lafarge Africa increasing its ROCE from 15% to 25%, while International Breweries struggled with worsening negative capital returns. Nigerian Breweries posted a slight decline, whereas Cadbury Nigeria reported a remarkable surge in capital returns after clearing long-term debt. Nestlé Nigeria experienced a substantial decline in capital returns, highlighting financial struggles in the consumer goods sector. Meanwhile, Unilever Nigeria maintained stable returns, while Beta Glass and TotalEnergies recorded significant improvements.
These financial trends suggest that some foreign-owned firms may continue investing in Nigeria, while others may adopt a cautious approach or even scale back operations. The overall decline in ROCE, coupled with economic challenges, could influence future investment decisions. Companies like MTN Nigeria and International Breweries may need strategic restructuring to navigate the tough business environment, while firms like Lafarge Africa and Cadbury Nigeria appear better positioned for growth.