While profit after tax remains a headline indicator of financial performance, it does not provide the full picture of a company’s profitability. Return on Equity (RoE) offers a deeper insight, measuring how effectively a company utilises shareholders’ equity to generate earnings.
In this report, BusinessDay evaluates the most profitable companies in Nigeria based on the Return on Equity metric.
Okomu Oil Palm Plc – 85%
In FY 2024, Okomu Oil had an RoE of 85 percent, making it by far the most profitable company in Nigeria. The company recorded a net income of N40 billion for the year—nearly double the N20.6 billion reported in 2023.
Okomu, alongside fellow palm oil maker Presco has forged a reputation for operational efficiency, as it posted a 57 percent RoE for FY 2023. In 2024, Okomu recorded a N130 billion revenue as its rubber sales jumped from N7.95 billion as of FY 2023 to N22.5 billion in 2024.
Nigerian Aviation Handling Company – 80%
NAHCO’s return on equity for FY 2024 is 80 percent, up from 52 percent as of 2023. With its shareholders’ fund rising from N12.1 billion to N20.1 billion in 2024, the company’s net income grew to N12.9 billion during the year.
The group’s revenue in 2024 was N53.5 billion, almost double 2023’s N28.4 billion. Although, administrative expenses more than doubled to N13.8 billion, from N6.1 billion in 2023, NAHCO’s operating margin was 37 percent. In 2023, the group’s operating margin was 31 percent.
BUA Foods Plc – 77%
BUA Foods Plc leads Nigeria’s trillion-naira market cap club in terms of return on equity, delivering an impressive 77 percent RoE in 2024—up from 45 percent the previous year. The group’s net income surged to N266 billion, marking a 137 percent increase from the N112 billion recorded in 2023.
With a gearing ratio of 61 percent, BUA Foods leans more heavily on debt to finance its growth, though the level remains within a manageable range. Its trailing P/E ratio of 28.3x signals strong investor confidence, positioning the stock to sustainably attract capital from the equities market if needed.
The Initiates Plc – 76%
Waste management company, The Initiates Plc appears on the list with a 76 percent RoE in FY 2024. In 2023, the company’s RoE was 37 percent.
In 2024, the company generated N4.7 billion in revenue, marking a 152 percent growth from the N1.85 billion recorded in 2023. The company’s net income almost quadrupled, hitting N1.38 billion in 2024, from N348 million as of 2023.
CWG Plc – 69%
Computer Warehouse Group (CWG) Plc made a notable appearance on the list with a Return on Equity of 69 percent for FY 2024, more than double the 31 percent recorded in the previous year. The IT firm’s net income surged to N3 billion, representing a remarkable 428 percent increase from N576 million in 2023.
This sharp rise in profitability was driven by a 97 percent jump in revenue to N46.4 billion, up from N23.5 billion a year earlier. While administrative expenses rose by 63 percent to N5.7 billion, CWG’s exchange gains of N18.7 million provided additional support to its bottom line.
Briclinks Africa – 57%
Briclinks Africa also appears on the list with a 57 percent RoE for FY 2024, up from 16 percent in 2023. During the year, the company’s net income grew by about 450 percent to N22 million, from 2023’s N4 million.
With a modest shareholders’ fund of just N50 million, Briclinks has made efforts to demonstrate efficiency in generating profit from equity. However, its growth story is heavily debt-driven, with total liabilities standing at N8.12 billion and a staggering debt-to-equity ratio of 162.1.
While the company’s high RoE signals profitability, the heavy reliance on leverage raises concerns about the sustainability and risk associated with its growth. However, with a cash ratio of 3.75, the company demonstrates a solid liquidity position.
Read also: Top 10 most profitable Nigerian companies in Q3 2024
NEM Insurance Plc – 56%
NEM Insurance recorded a 56 percent RoE in FY 2024, a significant upgrade from 39 percent in 2023. The insurance firm’s net income hit N29.2 billion in FY 2024, more than double the N12.9 billion recorded in 2023.
The group’s insurance revenue grew by 88 percent in 2024, to N98 billion, from N52.1 billion as of 2023. This growth alongside a net investment income of N14.8 billion was instrumental in driving NEM Insurance’s impressive financials for 2024.
AXA Mansard Plc – 55%
2024 marked a standout year for insurance companies, with AXA Mansard delivering a remarkable 55 percent Return on Equity (RoE). The group recorded a net income of N26 billion for FY 2024, reflecting a 116 percent increase from the N12 billion posted in 2023.
Driven by strong growth in its core business, AXA Mansard’s insurance revenue surged to N131.7 billion, up from N82.8 billion in FY 2023. Additionally, the group’s investment returns nearly doubled, reaching N34.5 billion compared to N17.6 billion the previous year.
Presco – 55%
Presco’s net income of N77.8 billion played a key role in achieving a 55 percent Return on Equity (RoE) for the oil palm company. While slightly lower than the 60 percent RoE recorded in 2023, the result underscores Presco’s continued operational efficiency.
In 2024, Presco’s shareholders’ funds almost tripled to N211.2 billion, from N73.9 billion at the year’s start. This growth is linked to the N77.7 billion net assets owned by the group’s minority shareholders.
Custodian Investment – 50%
Custodian Investment Plc achieved a remarkable 50 percent RoE for FY 2024, a significant improvement from the 27 percent recorded in 2023. The group, which owns Crusader Sterling Pensions, UPDC Plc, and Custodian & Alliance Insurance, posted a net income of N53.5 billion in 2024—marking an impressive 172 percent growth from N19.7 billion in 2023.
The firm generated N78.3 billion in income from its investments, although its insurance services faced a net loss of N7.2 billion. Despite this, an unrealized foreign exchange gain of N23.2 billion helped Custodian record a pre-tax profit of N60.7 billion.
