Nigeria's Top Most Profitable Companies Thriving Against the Odds

In the face of adverse conditions, Nigerian companies have successfully defied economic challenges and achieved remarkable financial results. Despite encountering high inflation and sluggish economic growth, businesses in Africa's largest economy have exhibited remarkable resilience, characterized by heightened demand and impressive performances.

In 2022, the Nigerian economy witnessed a moderate real-term expansion of 3.1%, signaling slower growth compared to the previous year's 3.4% increase. The inflation rate soared to its highest level in 21 years, reaching 18.77%, primarily due to the ripple effect of the Russia-Ukraine conflict. Nevertheless, Nigerian companies have effectively bolstered their revenues and rewarded shareholders with dividend payments.

A group of fifty (50) leading companies listed on the Nigerian Exchange (NGX) demonstrated their financial strength by recording a profit before tax (PBT) of N3.54 trillion in 2022, an 8.1% increase from the previous year's N3.27 trillion. These companies also witnessed a post-tax profit surge of 9.8%, amounting to N2.69 trillion. Moreover, they distributed an impressive total of N1.39 trillion to shareholders as dividends during this period. Despite inflation and foreign exchange challenges impacting their expenses, these companies delivered outstanding financial figures, establishing themselves as contenders for the title of the most profitable companies.

Research and analysis of available data has led to the compilation of the top 10 most profitable companies in Nigeria in 2022, based on their profit before tax (PBT). This metric is a crucial indicator of a company's performance, particularly from the perspective of its shareholders, as dividends are paid from the net income derived after tax deductions from the PBT.

After analyzing the rankings, it becomes clear that telecommunications companies (telcos) make up 20% of the companies listed, while cement-producing firms account for another 20%. Consumer goods companies represent 10% of the list, and the remaining 50% are banks.

Among the banks listed, their combined profit before tax totaled N1.03 trillion, while the telcos achieved a remarkable N995.2 billion. The consumer goods company contributed N107.2 billion to the list, while the two cement companies together recorded N644.2 billion in profit before tax.

Now, let's delve into the top 10 most profitable companies in Nigeria for the year 2022:

•Ranking at #5, Guaranty Trust Holdings (GTCO) posted a profit before tax of N214.2 billion, showing a slight decrease of 3.3% from the previous year's N221.5 billion. Despite facing challenges from rising operating costs and an Expected Credit Loss of N35.6 billion due to exposure to Ghanaian government securities, GTCO achieved commendable revenue growth of 20.4%, amounting to N539.4 billion. Though the profit after tax experienced a marginal decline of 3.2% to N169.2 billion from N174.8 billion, GTCO declared a total dividend of N88.29 billion in the review year. The bank received accolades such as the Independent Best Commercial Bank in Digital Technology and Support for SMEs in 2022.

•Securing the #4 position, Zenith Bank Plc reported a profit before tax of N284.7 billion in 2022, marking a modest increase of 1.5% compared to N280.4 billion in the previous year. Zenith Bank capitalized on the favorable interest rate environment and increased demand for credit, resulting in significant revenue gains. The bank achieved a remarkable year-on-year gross earnings increase of 23.5%. However, due to a 69.6% surge in tax expenses, Zenith Bank experienced an 8.4% decline in net income, settling at N223.9 billion. Despite these challenges, Zenith Bank declared a total dividend payment of N100.5 billion, surpassing the N97.3 billion paid in the previous year. Additionally, the bank incurred N60.7 billion as income tax expense.

•Claiming the #3 spot, Airtel Africa Plc, a telecommunications company generating around 40% of its revenue from Nigeria, recorded a profit before tax of N461.3 billion in 2022, compared to N513.5 billion in the previous year. It's important to note that Airtel Africa reports its financials in USD, which have been converted using the prevailing N/USD exchange rate. The company achieved an impressive revenue surge of 18.5%, amounting to N2.34 trillion, with operating profit increasing by 21.7% to N783.8 billion. However, net profit experienced modest growth of 5.6%, reaching N334.6 billion in the review year. Airtel Africa attributed this decline in profitability to the adverse impact of currency devaluations across its markets. Nevertheless, the company declared a total dividend of $0.05, equivalent to N91.4 billion in the review year.

•At #2, Dangote Cement Plc, the largest cement producer in Africa, recorded a profit before tax of N524 billion in 2022, a marginal decline of 2.7% from N538.4 billion in 2021. Despite a decline in sales volume, Dangote Cement's revenue rose by 17% to N1.62 trillion from N1.38 trillion the previous year, driven by sales of cement and clinker. The company achieved a slight 0.6% improvement in operating profit, reaching N585.9 billion. Additionally, net income experienced a 4.9% increase to N382.3 billion, attributed to a decline in income tax expenses, which fell by 18.5% to N141.7 billion. Dangote Cement declared a total dividend of N20 per share, resulting in a payment of N340.8 billion in 2022.

•Securing the top position at #1 is MTN Nigeria, the leading telecommunications company in the country. With over 75.6 million mobile subscribers and 39.5 million data subscribers, MTN Nigeria recorded a profit before tax of N533.97 billion in 2022, a substantial 22% increase from N436.7 billion in 2021. MTN Nigeria attributed its growth to increased revenue from data, fintech, and digital services, as well as effective cost optimization and operational efficiency. The company witnessed a remarkable revenue surge of 22% to N2.01 trillion, becoming the first Nigerian company to surpass the N2 trillion revenue mark. Despite rising costs, MTN Nigeria's operating profit experienced a 25% growth to N733.29 billion, while the profit after tax was stated at N175.1 billion. The company incurred N175.1 billion as income taxes for the year. MTN Nigeria rewarded its shareholders with a total dividend of N15.6 per share, surpassing the N13.12 per share paid in 2021. Consequently, the company's total dividend payments summed up to N317.53 billion, compared to N267.1 billion in the previous year.

These top 10 most profitable companies in Nigeria for the year 2022 showcase resilience and the ability to thrive in challenging economic conditions. Despite inflationary pressures and other economic headwinds, these companies have generated substantial profits and provided value to their shareholders, solidifying their positions as leaders in their respective industries.