NGX debt analysis: 31 firms cut borrowings 27% but six companies face financing pressure

Analysis of 31 NGX-listed companies with December year-ends shows combined interest-bearing borrowings fell 26.9% to N7.92 trillion in 9M 2026 from N10.83 trillion at December 2025. However, six companies warrant close scrutiny because financing costs are consuming a disproportionate share of operating earnings and cash generation.

Top borrowers remain Oando (N2.16 trillion), Aradel Holdings (N1.51 trillion), and Seplat Energy (N1.05 trillion), with the top ten accounting for N7.21 trillion combined. But absolute debt levels are less telling than service capacity.

FTN Cocoa stands out with debt at 17.89 times shareholders' equity (N21.95 billion debt vs N1.23 billion equity). Its operating profit of N2.08 billion relies entirely on foreign exchange gains—excluding those, the company would show a loss. Finance costs rose 69% to N617.71 million while operating cash flow declined.

UAC Nigeria reduced borrowings 23.8% to N262.63 billion, but finance costs surged 348% to N38.90 billion. Operating profit covers finance costs only 1.53 times. MeCure Industries spends roughly half its operating profit (N8.84 billion of N17.49 billion) on finance costs.

TotalEnergies Marketing improved interest coverage to 1.56 times from 0.28 times, but short-term borrowings (N59.26 billion in overdrafts) create refinancing risk. Conoil's operating cash flow of N274.81 million falls far short of N12.99 billion in interest payments. Transcorp Hotels saw debt jump 422.5% to N54.96 billion while operating cash flow turned negative N15.93 billion.

Positive signals: Dangote Cement halved borrowings to N541.53 billion, MTN Nigeria cut conventional debt to N333.32 billion, and Nigerian Breweries eliminated conventional borrowings entirely.

For investors assessing these names, three questions matter: How much debt relative to equity and earnings? What share of operating profit goes to finance costs? Does operating cash flow cover repayments without fresh borrowing? The 9M results show debt becomes problematic not at a specific level, but when earnings and cash generation cannot sustain it.

SOURCE: https://nairametrics.com/2026/11/13/nigerian-companies-with-the-highest-external-debt/