TotalEnergies Marketing Nigeria Plc is projected to return to profitability, though muted, in the first quarter ended March 2026, despite rising operating expenses and heavy finance costs, according to the company’s profit and loss forecast.
The downstream petroleum marketer is projected to generate revenue of N277.8 billion in the three-month period, highlighting sustained demand for white products and lubricants across Nigeria’s deregulated fuel market.
However, a high cost of sales estimated at N250.5 billion leaves the company with a gross profit of N27.4 billion, reflecting the thin margins that continue to define fuel marketing in Africa’s biggest oil producer.
The potential return to profitability follows a nine-month loss streak. The oil marketer posted a N14.1 billion loss in the months through September 2025 from a N27.42 billion profit in the same period two years ago.
The forecast implies a gross margin of about 9.9 percent, reflecting persistent pricing pressure, volatile import costs and a competitive retail environment. While TotalEnergies Nigeria is expected to supplement its core earnings with other income of N1.9 billion, operating costs remain elevated.
Selling and distribution expenses are projected at N4.1 billion, while administrative expenses are forecast at a significantly higher N18.5 billion, absorbing a large portion of gross profit.
Combined, these costs pull operating profit down to N6.7 billion, indicating that scale alone has not translated into operating leverage during the quarter.
For investors, the figures reinforce a recurring theme in Nigeria’s downstream sector: revenue growth does not necessarily equate to earnings strength, particularly in a market still grappling with logistics bottlenecks, FX volatility and cost inflation.
The most material drag on profitability in the quarter comes from financing. While the company expects to earn finance income of N403.7 million, this is dwarfed by finance costs of N5.45 billion, resulting in a net finance loss of N5.05 billion.
This wipes out most of the operating profit, leaving profit before tax at just N1.64 billion. After accounting for income tax expense of N1.39 billion, TotalEnergies Nigeria is forecast to post a net profit of N252 million for the quarter — a razor-thin bottom line relative to revenue size.
The numbers suggest that borrowing costs remain a key vulnerability for the company, particularly in a high-interest-rate environment where overdrafts and short-term facilities are expensive. It also underscores the sensitivity of earnings to balance-sheet structure rather than operating performance alone.
Despite weak accounting profits, the cash flow forecast paints a more resilient picture. The company expects to generate N63.6 billion in net cash from operating activities, driven by cash receipts from customers of N264.0 billion and relatively contained payments to suppliers and employees of N200.4 billion.
This strong operating cash inflow highlights the cash-generative nature of fuel marketing, even when margins are thin. Notably, no income taxes are expected to be paid in cash during the quarter, supporting liquidity.
However, cash outflows remain significant elsewhere. Investing activities are forecast to result in a net cash outflow of N392.6 million, largely due to capital expenditure of N821.3 million, partially offset by interest income and minor asset disposals.
Financing activities exert the largest pressure, with N60 billion in borrowings repaid and N5.45 billion paid in interest, resulting in a net financing cash outflow of N65.5 billion.
After accounting for all cash movements, the company is forecast to record a net cash decrease of N2.27 billion in the quarter. Cash and cash equivalents are expected to rise slightly to N91.7 billion at the end of March, compared with N89.45 billion at the end of December, reflecting timing effects rather than a structural improvement in liquidity.
The data suggests a company prioritising debt reduction, even at the expense of short-term profitability. For equity holders, this trade-off may be viewed positively if it lowers future finance costs and earnings volatility.
TotalEnergies Nigeria’s Q1 earnings forecast underscores the fragile economics of Nigeria’s downstream oil market. While revenue momentum and operating cash flow remain strong, high operating expenses and financing costs continue to suppress profitability.
The key variable for future quarters will be whether debt reduction materially lowers finance charges and allows operating profit to flow through to the bottom line.