Fitch Ratings has downgraded Dangote Industries Limited’s (DIL) credit rating to B+ and put it on ratings watch negative, citing concerns about its liquidity and ability to raise money.
DIL operates what will be Africa’s largest oil refinery once fully operational, a 650,000 barrel per day facility in Nigeria.
It also controls Dangote Cement.
“The downgrade reflects significant deterioration in the group’s liquidity position,” Fitch said, adding that the group had underperformed its operational and financial expectations and was also hit by devaluations to the naira currency.
“We do not expect a positive rating action until the company’s liquidity position improves substantially.”
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Nigeria’s currency devaluation in 2023, which sent the naira to record lows, led to a 2.7 trillion naira ($1.74 billion)foreign exchange loss for Dangote last year, Fitch said.
Dangote faces a “mismatch” between dollar-denominated debt and domestic revenue in naira, the ratings agency said.
The company’s oil refinery operated at about 50% capacity in the first half of the year, at 325,000-375,000 bpd, Fitch said, while Dangote’s fertiliser business was hindered by inadequate gas supply.
Fitch said it expects Dangote’s margins in cement to drop further this year, dented by a limited ability to pass on higher costs to consumers, while demand remains soft. Reuters