An analysis of 32 NGX-listed companies shows that while several businesses reduced borrowings in the first nine months of 2026, others continue to face pressure from high financing costs, weak equity positions, and limited cash coverage.
The 31 companies with December financial year-ends reported combined interest-bearing borrowings of N7.92 trillion as of September 30, 2026, down 26.9% from N10.83 trillion in December 2025.
Borrowing money is not necessarily a problem for a business. Companies use debt to expand production, acquire assets, finance working capital, and support future growth.
The concern begins when debt grows faster than a company’s capacity to repay it, or when financing costs consume a significant portion of operating earnings.
For this assessment, Nairametrics examined outstanding interest-bearing borrowings, debt relative to shareholders’ equity, finance costs, operating profit, and cash generation.
The findings highlight several companies whose debt positions deserve closer attention.
Completing the top ten were MTN Nigeria with N333.32 billion, UAC of Nigeria with N262.63 billion, Presco with N140.26 billion and Transcorp with N131.82 billion.
Together, these ten companies reported N7.21 trillion in outstanding borrowings as of September 30, 2026.
However, the size of outstanding borrowings does not necessarily indicate financial distress. Some companies have substantial debt supported by strong earnings and cash generation, while others carry smaller balances that place greater pressure on their financial resources.
The analysis therefore further examines whether companies generated sufficient earnings and operating cash flow to service their obligations, rather than relying on absolute borrowing levels alone.
FTN Cocoa Processors stands out because of the size of its borrowings relative to the financial resources supporting its operations.
At September 30, 2026, the company reported total borrowings of N21.95 billion, down 5.4% from N23.21 billion in December 2025. Although the reduction is positive, shareholders’ equity stood at just N1.23 billion.
The company’s reported operating profit also requires closer examination.
However, it recognized N2.08 billion in foreign exchange gains. Excluding those gains, the company would have recorded a marginal operating loss.
Finance costs increased from N365.11 million to N617.71 million, while operating cash flow declined from N2.99 billion to N1.89 billion.
The concern is therefore not simply the outstanding debt, but whether the company’s underlying operations can generate sufficient recurring earnings to service it.
The diversified conglomerate reduced its borrowings by 23.8%, from N344.81 billion in December 2025 to N262.63 billion in September 2026.
However, its debt remained substantial relative to shareholders’ equity of N70.85 billion. Its debt-to-equity ratio stood at 3.71 times, while net debt was N231.09 billion.
The more significant concern is the cost of maintaining those obligations.
Nevertheless, the company recorded a substantial improvement in operating cash flow, which increased from N21.56 billion to N103.00 billion. This provides some reassurance about its capacity to meet financial obligations.
Its results also reflect the expanded contribution of the packaged food and beverages business following the acquisition of CHI Limited, making the year-on-year comparison partly dependent on changes in the group’s structure.
Total interest-bearing debt increased by 7.5%, from N55.33 billion in December 2025 to N59.51 billion in September 2026.
Consequently, its operating profit covered finance costs approximately 1.98 times.
In practical terms, about half of its operating profit was equivalent to the reported cost of financing the business.
One encouraging development was the recovery in operating cash flow, which moved from negative N5.40 billion in 9M 2025 to positive N10.36 billion in 9M 2026.
TotalEnergies Marketing Nigeria illustrates how a company can reduce borrowings and still face financing pressure.
The short-term nature of these facilities creates liquidity and refinancing considerations.
TotalEnergies generated operating profit of N19.16 billion in 9M 2026, a significant improvement from N5.65 billion in the corresponding period of 2025.
Despite these improvements, interest coverage stood at just 1.56 times. This represents a substantial recovery from 0.28 times in 9M 2025, when operating profit was insufficient to cover reported finance costs.
Conoil also warrants attention because of its rising borrowing exposure.
With shareholders’ equity of N44.55 billion, its debt-to-equity ratio stood at 1.45 times.
The more concerning indicator is the relationship between its cash generation and financing obligations.
This suggests that cash generated from ordinary operations during the period was insufficient, on its own, to cover financing payments.
However, this comparison needs to be interpreted alongside movements in working capital, available liquidity, and other financing sources.
For investors, the question is whether the weakness in operating cash generation is temporary or reflects a more persistent financing challenge.
