Nascon Allied Industries Plc has announced its unaudited financial results for the first quarter of 2025, delivering a staggering 515% year-on-year growth in pre-tax profit to N11.310 billion.

The result places the company, a key member of the Dangote Group, on a trajectory that could see it record its most profitable year yet if the momentum is sustained.

The company, valued at N143 billion on the Nigerian Exchange (NGX) as of April 25, 2025, also reported a 515.02% year-on-year increase in profit after tax, rising to N7.578 billion. Remarkably, this figure already accounts for 48.63% of the company’s full-year 2024 net profit, signaling an aggressive earnings acceleration barely three months into the year.

A breakdown of the financials shows that Nascon recorded a revenue of N41.853 billion during the period under review, representing a 77.21% increase compared to the N23.613 billion posted in the corresponding period of 2024. The cost of sales also rose significantly to N23.957 billion, reflecting a 92.26% increase over the same period last year. Gross profit, however, climbed to N17.896 billion, marking a 60.39% rise, while selling and distribution expenses recorded a modest increase of 2.51%, amounting to N5.119 billion.

Another highlight was the company’s net finance income, which jumped to N887 million, representing an impressive 1,359.37% surge compared to the same quarter in 2024. Basic earnings per share doubled, rising by 101.08% to N3.74, while cash and cash equivalents stood at N5.615 billion at the end of the quarter, a 30.25% increase. Total assets grew to N25.011 billion, up 17.17% year-on-year.

A closer look at the results shows that Nascon’s extraordinary performance was driven by several interconnected factors. Chief among them was strong revenue growth and a moderation in overhead cost increases. Revenue from the northern segment of its market operations surged by over 86% year-on-year and contributed more than 77% of the company’s total revenue, underscoring Nascon’s deepening penetration and market dominance in the northern region where demand for its products has remained resilient.

On the cost side, the company faced pressure from raw material expenses, which now account for more than 87% of the total cost of sales. This reflects the persistent volatility in commodity prices and inflationary pressures that continue to impact the Nigerian manufacturing sector. Operating expenses, though elevated, did not grow as aggressively as revenues, helping the company defend its margins.

Another crucial driver of Nascon’s outstanding profit growth was the sharp decline in foreign exchange losses. In Q1 2024, the company had recorded N3.056 billion in forex-related losses, a figure that plummeted to just N55.38 million in Q1 2025. This significant improvement provided a major boost to the bottom line, helping to offset inflation-induced cost pressures and offering some insulation against Nigeria’s volatile macroeconomic backdrop.

The company’s balance sheet also reflects strengthening fundamentals. Total assets rose by 7.09% to N90.817 billion, with current assets making up over 82% of that figure, indicating a strong liquidity position. Nascon’s equity position improved substantially, with shareholders’ equity growing by 76.40% to N50.633 billion. As a result, equity now accounts for 55.73% of total assets, demonstrating a more robust financial foundation where the majority of assets are funded by shareholders’ capital rather than debt.

Furthermore, Nascon’s debt position improved significantly. Total borrowings declined to N1.145 billion as of the end of March 2025, down from N3.696 billion recorded at the end of December 2024. This deleveraging strategy, combined with the strong operating performance, helped lower the company’s interest expenses and substantially improved its interest coverage ratio. The financial flexibility gained from lower debt levels positions Nascon better to weather any unforeseen market shocks in the months ahead.

On the stock market, Nascon’s performance has reflected the strength of its fundamentals. The company began the year with a share price of N31.35 and has gained 68.9% year-to-date, making it the 11th best-performing stock on the Nigerian Exchange so far in 2025. Over the past four weeks alone, Nascon’s stock has appreciated by 20%, ranking it as the 8th-best performer over that period.

Investors have also enjoyed decent returns through dividends. For the 2024 financial year, Nascon declared a dividend of N2 per share, offering a dividend yield of 3.78% based on its end-of-year share price, further strengthening its attractiveness to income-focused investors.

Nonetheless, challenges persist despite the strong showing. Rising raw material costs and continued input price volatility present ongoing risks to operating margins. Delivery expenses are also expected to remain elevated, especially given Nigeria’s unpredictable fuel pricing environment and logistical difficulties. Although forex losses have sharply reduced, any resurgence in exchange rate instability could reintroduce pressures on the bottom line.

Looking ahead, analysts believe that Nascon’s ability to sustain its record pace of profit growth will depend largely on its capacity to manage these cost-side pressures and maintain its revenue momentum, particularly in its northern stronghold where sales have boomed. If the first quarter’s performance is any indication, however, the company appears well-poised to deliver another year of exceptional growth, consolidating its status as one of Nigeria’s top-performing industrial players.

The Central Bank of Nigeria (CBN) raised a total of N1.008 trillion at its Open Market Operations (OMO) auction held on Friday, April 25, 2025, significantly exceeding its initial offer of N500 billion.

The outcome followed overwhelming investor demand that led to a 102% oversubscription, a strong signal that Nigeria’s financial system remains awash with liquidity despite aggressive monetary tightening.

The auction had offered two maturities, 298 days and 319 days, but total bids approached N1.4 trillion as investors scrambled to secure high-yield government instruments amid rising inflation and surging money supply. The move underscores the CBN’s continued reliance on OMO bills as a key tool to mop up excess liquidity, even as inflationary pressures intensify.

Investor Appetite Concentrated on Longer Tenors

Investor preference was particularly skewed toward the 319-day instrument, maturing on March 10, 2026. The bill attracted a staggering N1.062 trillion in bids, more than four times the CBN’s offer of N250 billion. The central bank eventually allotted N688.30 billion at a stop rate of 22.73%, with bid rates spanning between 20.39% and 23.75%.

In comparison, the 298-day bill, set to mature on February 17, 2026, also saw strong interest, pulling in N329.54 billion in bids against an identical N250 billion offer. The CBN allotted N319.54 billion at a stop rate of 22.37%, with bid rates ranging from 20.45% to 23.75%.

The higher demand for longer-term bills reflects market expectations that Nigeria’s interest rates will remain elevated for an extended period, prompting investors to lock in attractive yields while they still can. It also signals limited confidence that inflation will ease meaningfully in the near term.

A Liquidity Glut Despite Monetary Tightening

The success of Friday’s OMO auction highlights the persistent liquidity surplus in the Nigerian banking system, even as the CBN maintains the highest cash reserve ratio (CRR) in the world at 50% and a policy rate of 27.5%.

Data from the CBN shows that Nigeria’s broad money supply (M3) grew sharply to N114.22 trillion in March 2025—a 24% increase compared to N92.19 trillion in March 2024. Month-on-month, M3 expanded by 3.2% from N110.71 trillion in February.

The growth was largely driven by a 38.9% surge in net foreign assets (NFA), now standing at N45.17 trillion, indicating stronger external liquidity and capital inflows. However, net domestic assets (NDA), which reflect internal liquidity within the economy, fell by 11.7% to N69.05 trillion, showing that while domestic credit conditions remain tight, external inflows are more than offsetting the squeeze.

This dynamic complicates the CBN’s effort to sterilize liquidity and curb inflation, with foreign money flowing into Nigerian assets even as the apex bank tries to restrict domestic money creation.

At the same time, inflationary pressures remain stubborn. Headline inflation rose to 24.23% in March 2025, up from 23.18% in February, according to the National Bureau of Statistics (NBS). On a month-on-month basis, inflation accelerated by 3.90%, compared to 2.04% a month earlier, suggesting that price pressures are broadening and becoming more entrenched.

The uptick in inflation, fueled largely by food prices, transportation costs, and energy expenses, indicates that despite the CBN’s aggressive tightening posture, monetary conditions remain too loose to effectively contain rising prices.

Worse, the expansion of the money supply, primarily via foreign asset accumulation, could make the inflation fight even harder unless fiscal and monetary authorities align their strategies.

Markets Eye Further Tightening

Friday’s auction sends a strong signal that more tightening could be on the horizon. All eyes are now on the CBN’s next Monetary Policy Committee (MPC) meeting scheduled for May 19–20, 2025, where pressure is mounting for stronger action to anchor inflation expectations.

While the CBN left the benchmark rate unchanged at 27.5% in February, the recent spike in inflation, alongside the surge in money supply, has raised expectations that further rate hikes—or even more aggressive liquidity tightening—may be necessary.

However, analysts warn that the CBN faces a delicate balancing act. Over-tightening could slow credit growth, hamper business activity, and worsen borrowing costs for households already grappling with a cost-of-living crisis. But failing to act could allow inflation to spiral even further, eroding purchasing power and undermining economic stability.

Investor Sentiment Remains Mixed

Despite warnings from international institutions like J.P. Morgan—which recently advised investors to exit long positions in Nigerian OMO bills due to global macroeconomic risks—Friday’s auction showed that domestic appetite remains strong. Investors appear willing to brave the risks, betting that Nigeria’s high yields will more than compensate for potential instability.

The intense demand for longer-dated securities suggests that many institutional players expect the CBN’s monetary stance to remain tight well into 2026, making longer-duration bills a preferred choice to lock in high returns before conditions eventually ease.

Nigeria is moving away from its traditional reliance on concessional funding to a more aggressive strategy centered on domestic revenue mobilization and asset optimization, Finance Minister and Coordinating Minister of the Economy, Wale Edun, said on Friday.

Speaking at a news conference following Nigeria’s participation at the 2025 International Monetary Fund (IMF) and World Bank Spring Meetings in Washington D.C., Edun explained that the government under President Bola Ahmed Tinubu is determined to wean the country off dependence on external concessional loans from institutions such as the World Bank, bilateral donors, and agencies including the European Union, Germany, and France.

According to Edun, the administration’s strategy has shifted away from the previous practice of heavy external borrowing, including raising commercial dollar funds through Eurobonds, toward a focus on boosting internal revenue and optimizing government assets.

“Raising commercial funds from Nigerians, then Nigerian diasporas saving in dollars by buying government dollar-denominated Eurobonds, and then ultimately going to the Eurobond market has run its course,” Edun said. “The focus now is on domestic revenue mobilization.”

The finance minister highlighted that Nigeria had made considerable progress in improving its debt profile with international institutions. He disclosed that the country’s consistent quarterly repayments to the IMF over the past two years have resulted in an 87.5 percent reduction in outstanding obligations. If this trend holds, Nigeria is expected to fully clear its IMF debt by mid-2025, a milestone Edun described as a “significant achievement” in strengthening the country’s financial governance.

Beyond revenue reforms, Edun emphasized that the broader economic strategy is to foster private-sector investment. Rather than the government leading major projects, the Tinubu administration aims to create an environment where private capital can drive investments in key sectors like infrastructure, transportation, and the digital economy.

“The philosophy and strategy of the administration of President Bola Ahmed Tinubu is to crowd in the private sector so that they can come in and invest across the board: infrastructure, digital, toll roads,” he said.

Mobilizing Domestic Revenue – An Uphill Climb

However, the domestic revenue mobilization agenda is not without serious challenges. One major hurdle lies in the tax component of the plan, which has so far faced strong headwinds from economic realities and public resistance.

The federal government’s efforts to reform the tax system — particularly around Value Added Tax (VAT) and other consumption taxes — have encountered stiff resistance. Earlier attempts to review VAT upwards triggered widespread pushback, with state governments also pushing back over control of VAT collection. In 2021, for instance, Rivers and Lagos states dragged the federal government to court over who should collect VAT within their jurisdictions, sparking a fierce legal and political battle that remains unresolved.

Also, the ongoing presidential proposed tax reform bills have sparked opposition, particularly from Northern Nigeria, which fears that the reforms could shortchange the region’s federal allocation, exacerbate economic hardship, and leave the region impoverished.

These tensions have complicated efforts to streamline and enhance tax revenue at the federal level.

Moreover, the economic downturn has severely depleted Nigeria’s tax base. As inflation bites deeper and businesses close, the number of individuals earning taxable income has drastically shrunk. Recent government policy decisions are also expected to have an impact.

In a bid to cushion the effects of hardship, the federal government exempted workers earning the minimum wage from paying personal income tax. With the national minimum wage currently standing at N70,000 monthly — and with more than 50 percent of Nigerians earning 50 percent less than that amount, according to 2023 data from Enhancing Financial Innovation and Access (EFInA), the pool of taxable individuals has become significantly narrower.

In essence, while the government seeks to mobilize more funds internally, the harsh reality is that there simply are not enough people with sufficient income to tax at the scale required to fill Nigeria’s revenue gaps.

The problem runs deeper. Even among the shrinking number of higher earners, voluntary tax compliance remains weak, and many in the informal sector, which accounts for nearly 60 percent of the economy, operate entirely outside the tax net.

As Edun and his team push forward with a model that prioritizes tax and asset-driven revenue over borrowing, questions remain about whether the broader economic structure can sustain such an ambitious shift without deep and inclusive reforms to widen the tax base, improve compliance, and stimulate real income growth.

The shift comes amid Nigeria’s continued battle with revenue shortfalls, high debt servicing costs, and mounting economic pressures triggered by global headwinds. With limited fiscal space and escalating demands for social and infrastructure spending, the government is now betting on domestic solutions to shore up its finances.

Edun’s comments reflect a broader narrative emerging from the Spring Meetings, where policymakers from developing countries faced increasing pressure to build more resilient and self-reliant economies rather than depending excessively on external borrowing, especially in a high-interest-rate global environment.