GCR Upgrades Dangote Industries Ratings, Forecasts Debt to Rise
GCR Ratings (GCR) has upgraded Dangote Industries Limited’s national scale long and short-term issuer ratings to AAA(NG) and A1+(NG), respectively, from A+(NG) and A1(NG) previously.
The ratings agency also upgraded the national scale long term issue rating accorded to each of Dangote Industries Funding Plc’s Series 1 Tranche A and Tranche B Bonds as well as the Series 2 Bond to AAA(NG), from A+(NG) previously.
The outlook on the ratings is accorded as stable.
GCR said the upgrade of Dangote Industries Limited’s ratings reflects the strengthened capital and leverage outlook, which is underpinned by robust cash flows from the successful ramp up of the petroleum refinery to full capacity, alongside strong earnings from the group’s other businesses.
Ratings analysts said improved operating performance has enabled debt repayment and refinancing on more favourable terms, resulting in stronger leverage metrics.
“While debt levels are expected to increase to support planned expansion projects, strong operating cash flows, coupled with ongoing equity injection, are expected to drive meaningful cash accumulation”, GCR said.
This should help offset the impact of higher borrowing, preserve adequate liquidity, and maintain leverage at comfortable levels.
In addition, ratings analysts said they noted improvements in risk management practices, treasury operations, and financial reporting practices.
“DIL continues to benefit from a strong competitive position, underpinned by its well-established brands, diversified business model, and broad geographic presence.
The group operates across several key sectors, including oil refining, cement manufacturing, sugar and salt refining, fertiliser production, logistics, and other industrial activities.
It is also pursuing a significant expansion strategy, including plans for an additional oil refining line at its Nigerian refinery complex and a new refinery project in Kenya, which could increase total refining capacity to around 2.1 million barrels per day upon completion.
The group’s diversification across industries and markets has strengthened its resilience by reducing earnings concentration risk, while fostering deep value-chain integration, extensive distribution networks, and a large customer base. These advantages have supported the leading market positions of its core subsidiaries and enhanced the stability of earnings and cash flows.
“We view DIL’s scale, diversification, the low substitution risk of its key products, and continued expansion as key credit strengths that support its long-term growth prospects and financial flexibility”.
The rating note stated that the improvement in the group’s sustainability assessment reflects demonstrated enhancements to risk management, treasury oversight, and financial governance following key senior finance appointments.
GCR said the group financial reporting has also improved, with enhanced transparency, better disclosure quality, and more timely account consolidation.
Timely finalisation of the 2025 audited financial statements further demonstrates the group’s progress in financial reporting and governance, ratings analysts said.
The group’s revenue growth accelerated significantly from financial year 2025 which ended 31 December 2025 (financial 2025), following the refinery’s transition to stable, full-capacity production.
DIL revenue increased by 67% in financial 2025, and further by 83.5% on an annualised basis as of June 2026 (1H 2026), with the oil and gas business contributing over 80% of group revenue.
Growth was driven by higher sales volumes, increased refinery throughput, and favourable refined-product pricing, supported in part by volatility in global energy markets arising from geopolitical tensions in the Middle East.
The cement, FMCG, and fertiliser businesses also delivered strong performance, benefiting from robust demand, higher pricing, and substantial production capacity, the rating note said.
The group reported significantly margin enhancement, with EBITDA margin strengthened to 13.9% in financial 2025 from 6.8% and further to 23.9% in 1H 2026 as refinery throughput increased, and operations were optimised.
“We forecast revenue growth of 75% in 2026, moderating to approximately 20% in 2027 as the benefits of the refinery ramp-up normalise. Further capacity expansion and product-price increases could provide additional upside.
“Although EBITDA margins are likely to moderate to approximately 20% in 2026–2027, the cement and fertiliser businesses should continue to provide stable earnings support.
“We have revised the group’s leverage and capital structure assessment to neutral, reflecting the reduction in debt and a more comfortable leverage metrics”.
DIL gross debt declined to NGN10.2 trillion (USD7.1 billion) as of June 2026, from NGN10.94 trillion in financial 2025 and a peak of NGN15.2 trillion in 2024, GCR said.
The reduction followed substantial repayments and the refinancing of key obligations utilised to finance the refinery and petrochemical projects.
The rating note said this included the repayment of approximately NGN5.8 trillion in syndicated loans and the restructuring of NGN3.6 trillion in shareholder debt into NGN1.897 trillion syndicated facility.
Supported by stable debt, ratings analysts said the stronger cash holdings and earnings growth, net debt to EBITDA improved to 0.1x, while gross debt to EBITDA remained strong at 0.9x even after assuming that a significant portion of cash is earmarked for capital expenditure.
Operating cash flow (OCF) coverage of debt improved to over 40% from a negative position in financial 2024, while EBITDA interest coverage increased to more than 8x, against less than 3x over the last three years.
Although the group is expected to raise additional funding to support its expansion programme, leverage metrics are expected to remain strong.
“We forecast gross debt to increase to approximately NGN11.5 trillion in financial 2026 and NGN14.7 trillion thereafter. However, OCF-to-debt and EBITDA interest coverage are expected to remain comfortably above 40% and 8x, respectively, over the outlook period”.
To the ratings, group’s liquidity remains a positive rating factor, according to GCR, underpinned by cash holdings of over NGN9.3 trillion as of 30 June 2026 and access to substantial committed credit facilities.
These, alongside expected strong operating cash flows and proceed from the ongoing equity raise of around NGN2.152 trillion within the oil and gas business, provide a solid liquidity buffer.
GCR said a portion of inventories, pledged against working capital facilities, also contributes to available liquidity. While modest maturing obligations of NGN2.7 trillion ease near-term liquidity pressure, several projects are scheduled for execution over the next three years, which would require substantial capital commitments.
However, ratings analysts said they expect the company to retain flexibility over the timing and scale of implementation, subject to the availability of sufficient funding. This includes the potential utilisation of undrawn credit lines from its various lenders.
Based on available liquidity sources relative to projected uses, liquidity coverage is expected to remain above 1.2x over the next 18-month period to December 2027.
The Series 1 (Tranches A and B) and Series 2 Senior Unsecured Bonds (cumulative NGN300Bn) were issued in 2022 by Dangote Industries Funding Plc, a sponsored special purpose vehicle.
Being senior unsecured debt sponsored by DIL, the Series 1 Tranches A and B Bonds and the Series 2 Bond rank pari passu with all other senior unsecured creditors of the group.
Therefore, the Bonds bear the same national scale long-term rating and outlook as accorded to DIL, and any change in DIL’s long-term corporate rating would impact the Bonds’ ratings.
GCR said the stable outlook reflects expectations that DIL will sustain its strong operating performance, supported by the refinery’s continued operation at full capacity, and resilience of its other businesses. GCR
This should underpin adequate liquidity and comfortable leverage metrics despite the group’s planned debt-funded expansion projects.
The outlook balances these strengths against execution risks associated with the group’s sizeable expansion programme, potential volatility in global energy markets.
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