Major Nigerian companies are progressively regaining profitability, characterised by strong earnings growth in Q1 2026.
Seventy per cent of firms reported year-on-year earnings growth, signalling the early stages of a corporate earnings recovery following two years of economic turbulence initiated by the current administration’s reforms.
This period saw a decisive shift from last year, when businesses in banking, manufacturing, and consumer goods were still reeling from foreign exchange reforms, high inflation, and increased borrowing costs.
With a stable currency, optimised pricing, and effective cost management, many companies are now boosting core operational profits rather than depending on transient currency gains.
Manufacturing Leads the Turnaround
The clearest evidence of recovery came from the manufacturing and industrial sectors, where Dangote Cement, Africa’s largest cement producer, has reported a 53.5 per cent jump in net profit to ₦321.10 billion, up from ₦209.25 billion a year earlier. Its profit before tax rose 35 per cent to ₦421.17 billion. The company absorbed a 38 per cent rise in administrative expenses and a 15.5 per cent increase in distribution costs, suggesting that both pricing power and volume recovery are working in tandem.
Lafarge Africa‘s profit before tax more than doubled, increasing 104 per cent to ₦149.12 billion from ₦73.11 billion. Net profit also doubled to ₦97.95 billion, despite a 75.1 per cent rise in administrative costs, indicating robust revenue growth.
Despite a 10.7 per cent decline in group revenue to ₦394.62 billion, BUA Foods significantly improved its profitability. Gross profit rose 9.2 per cent to ₦175.65 billion, expanding gross margins by over eight percentage points to 44.5 per cent. Administrative expenses were nearly halved, dropping 48.6 per cent to ₦5.82 billion, leading to a 13.6 per cent increase in net profit to ₦142.32 billion. The standalone company performance was even stronger, with operating profit surging 22 per cent and net profit climbing 27.5 per cent.
Guinness Nigeria‘s headline profit figures were flattered by financing rather than operations. Revenue grew modestly by 3.7 per cent to ₦122.77 billion, but operating profit dipped 4.5 per cent. The striking number was further down the income statement: profit before tax surged 53.2 per cent to ₦15.75 billion, driven primarily by a significant reduction in finance costs. Net profit rose 47.9 per cent to ₦10.39 billion.
Banking Sector: Mixed Fortunes
Nigerian banks experienced varied results, with some achieving significant profit growth while others struggled with increased costs and credit issues.
FCMB Group recorded the most striking turnaround in the banking sector, with profit before tax rising 148 per cent to ₦86.99 billion and net profit more than doubling to ₦76.53 billion — even as every major cost line moved higher. In a high-interest rate environment, the bank benefits from a repriced balance sheet, leading to strong net interest income that offsets rising costs.
Wema Bank also impressed, with profit before tax jumping 76.1 per cent to ₦72.57 billion despite a 38.9 per cent rise in personnel expenses and a 70.7 per cent surge in depreciation costs, the steepest infrastructure cost growth among the banks reviewed.
Zenith Bank, Nigeria’s largest profit generator, reported nearly flat results with a 2.9 per cent rise in profit before tax to ₦360.92 billion and an unchanged net profit of ₦314.02 billion, indicating that its size alone no longer ensures substantial earnings growth.
United Bank for Africa and Fidelity Bank both reported profit declines. UBA’s profit before tax fell 21.4 per cent to ₦160.66 billion as operating expenses surged 29.8 per cent, reflecting what the bank described as post-recapitalisation investment and network expansion.
Fidelity Bank, despite gross earnings growing 37.9 per cent to ₦434.95 billion, saw net profit fall 18.3 per cent to ₦74.47 billion, as rising credit loss provisions and a 46 per cent jump in depreciation and impairment charges eroded the gains from revenue growth.
Agriculture and Power
Okomu Oil Palm delivered steady results, with profit after tax rising 8.6 per cent to ₦23.60 billion despite a 22.8 per cent increase in net operating expenses, a resilient performance given the volatile input cost environment facing agribusinesses.
The starkest deterioration in the entire set came from Geregu Power, where revenue collapsed 42.6 per cent to ₦18.24 billion and net profit fell 79.8 per cent to just ₦2.10 billion. The scale of the decline points to structural headwinds, most likely reduced power generation volumes or adverse developments in electricity tariff settlements, that cost discipline alone could not offset.
The most important theme emerging from Q1 2026 results is that Nigerian companies are increasingly generating profits from their underlying businesses rather than from temporary foreign exchange gains or accounting adjustments.
In Q1 2025, many firms were still adapting to a rapidly changing economic environment characterised by currency volatility, inflation shocks, and financing pressures.
However, Q1 2026 shows a shift toward margin expansion, operational efficiency, and sustainable earnings generation.
While challenges remain, particularly in power and parts of the banking sector, the latest results suggest that economic stability is beginning to translate into genuine corporate earnings recovery.
Despite strong Q1 2026 earnings from Nigerian companies sparking debate over whether they signify true economic recovery or just inflation, experts contend these results indicate a broader economic rebound, though one not yet fully reflected in citizens’ living standards.
CPPE Director-General Muda Yusuf attributed the banking sector’s and other industries’ strong profitability to improved macroeconomic stability and corporate performance.
He believes that the exchange rate reforms have improved transparency in the foreign exchange market, restored investor confidence, strengthened external reserves and attracted capital inflows that have supported business activity and expanded transaction volumes across the economy.
“There is a strong correlation between the health of the real economy and the performance of banks. As businesses become more profitable, banking assets improve in quality, loan repayment capacity strengthens, and demand for banking services increases,” Yusuf said.
He noted that sectors such as oil and gas, telecommunications, financial services, real estate and other service industries have recorded stronger performance, creating positive spillover effects for the banking sector.
Yusuf also identified elevated yields on Treasury Bills and Federal Government securities as major contributors to bank profitability, as financial institutions continue to earn substantial investment income from government debt instruments.
Similarly, Omorodion Ambrose, Chief Research Officer at InvestData Consulting Limited, said the stronger earnings reported by companies should not be viewed solely as a consequence of inflation.
According to him, if consumers were unable to absorb higher prices, companies would struggle to grow revenues and profits regardless of pricing adjustments.
“What we are seeing is not merely a reflection of higher prices. It is also a reflection of improving consumption, stronger business activity and increasing resilience among corporate organisations,” he said.
Ambrose argued that the economy is showing clear signs of recovery, particularly through improved GDP growth, stronger trade performance, better corporate earnings and a more stable macroeconomic environment.
He, however, cautioned that the recovery remains largely at the macroeconomic level and has not yet translated fully into improved welfare for many Nigerians.
“There is economic recovery because of the stability and transformation taking place in the economy, but the benefits have not been fully reflected in the lives of ordinary citizens. The macroeconomic indicators are improving, and over time those gains should begin to filter into the broader economy,” he said.
The analysts noted that the first quarter results represent one of the strongest corporate earnings seasons since the post-COVID period, with companies benefiting from improved exchange rate stability, lower foreign exchange losses, stronger investment activity and increased confidence across financial markets.
Head of Dealings at Capital Assets Limited, Adeniyi Musedeeq Adelana, attributed the stronger earnings to a combination of fiscal, monetary and exchange rate reforms that have improved the operating environment for businesses.
According to him, exchange rate unification, stronger external reserves, moderating inflation and lower financing pressures have significantly improved productivity and profitability across several sectors.
“The macroeconomic indicators have responded positively to reforms. The easing of foreign exchange pressures, improvements in reserves, moderating inflation and stronger investment activity have all contributed to the better profitability reported by listed companies,” he said.
Despite the optimism surrounding first-quarter earnings, analysts warned that external risks could still affect corporate performance in the months ahead. Ambrose cautioned that geopolitical tensions in the Middle East could increase business costs and test the sustainability of the earnings recovery recorded in Q1 2026.
“The second quarter will be critical in determining whether the performance can be sustained, especially considering developments in the Middle East and how they may affect operating costs for businesses in Nigeria,” he said.
According to him, while Nigerian companies have demonstrated resilience in navigating economic headwinds in recent years, rising geopolitical tensions could create fresh pressures through higher energy costs, inflationary pressures and disruptions in global markets
For now, the evidence suggests that Nigeria’s corporate sector has moved beyond the survival mode that characterised much of 2024 and 2025. The next challenge is whether the recovery in corporate boardrooms can translate into stronger investment, job creation and improved living standards for households across the country.
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