Nigeria: high product prices, demand drives profits – Total Energies

Total Energies Marketing Nigeria announced its unaudited first quarter (Q1) 2022 results for the period ended March 31, 2022, with revenue up 46.3% to N97.61 billion from N66. 70 billion naira in the first quarter of 2021.

Revenue growth recorded by Total Energies Marketing Nigeria was driven by rising commodity prices and consumer demand in the three-month period of 2022.

The oil marketing company maintained its dominance in the downstream oil and gas market, with revenue growth driven by impressive growth in lubricants and others which gained 91.3% in the first quarter of 2022 and petroleum products which increased by 34.1% in the first quarter of 2022.

Revenue contribution from the lubricants and other line increased to 31% in Q1 2022 from 24% in Q1 2021, the highest level on record and highlighting management’s strategy to maximize revenue growth. its revenues from lubricants.

Across all of its lines of business, network revenue increased 10.8% and contributed 53% of revenue), general trade increased 125.6% and contributed 37% of revenue) and l aviation grew by 168.3% and contributed 11% of revenue. revenue) segments all increased.

Net financial expense decreased by 44.6% to N7.64 million from N140.08 million in the first quarter of 2021, following an increase in financial income to N684 million from N37 .05 million naira in the first quarter of 2021.

On the other hand, finance charges increased by 330% to N761.65 million, owing to interest on other loans of N515.32 million reported in the first quarter of 2022.

Overall, pre-tax profit jumped 50.6% to N6.55 billion in the first quarter of 2022 from N4.35 billion in the first quarter of 2021.

Despite a higher tax burden of 2.19 billion naira in 2022 compared to 1.38 billion naira in the first quarter of 2021, profit after tax increased by 47% to 4.37 billion naira in the first quarter of 2022, compared to 2.97 billion naira in the first quarter of 2021.

Rising revenue to generate profit

So far, Total Energies Marketing Nigeria had recorded basic and diluted earnings per share (EPS) of N49.26 in 2021 compared to N6.08 in 2020 following significant revenue growth and lower financial charges.

Revenue increased by 66.7% to N341.32 billion in 2021 from N204.72 billion in 2020, driven by increased consumer demand for the festive season, growth in volume of Total Energies Marketing Nigeria in 2021 and rising product prices.

Thus, substantial increases were recorded in business sectors that included, among others, petroleum products and lubricants.

The revenue breakdown revealed that petroleum products gained 62.5% to reach N255.19 billion in 2021 from N157.05 billion in 2020, while revenue generated by lubricants and others increased significantly. significant by 81% to reach N86.13 billion in 2021 from N47 billion. 67 billion in 2020.

The National Bureau of Statistics (NBS) has revealed that the average price paid by consumers for Premium Motor Spirit (PMS), also known as petrol, increased by 0.04% on an annual basis to reach N165.77 in December 2021 compared to N165. .70 rated in December 2020.

The bureau also revealed that the average price of refilling a 5kg cylinder of liquefied petroleum gas (cooking gas) on a year-on-year analysis fell from N1949.75 in December 2020 to N3,594.81 in December 2021, an increase of 84.37%. .

Average retail price

According to the NBS report: “The average retail price of automotive gas oil (diesel) paid by consumers increased by 28.97% year-on-year, compared to a lower cost of N224.37 per year. liter recorded in the corresponding month of the last year at a higher cost of N289.37 per liter in December 2021.”

However, according to profit and loss figures from Total Energies Marketing Nigeria, the oil marketing company thus reported a cost of sales of 286.32 billion naira in 2021, a 65% increase from 173 .97 billion naira reported in 2020.

The interaction between revenue and cost of sales positioned gross profit at N55 billion in 2021, up 79% from the N30.75 billion reported in 2020.

Gross margin (-377 basis points) decreased to 14.6%, as higher crude oil prices (average Brent price: $79.66/bbl in Q4-2021 vs. $45.26/bbl in Q4 2020) caused the cost of sales to increase faster by around 95% more than revenue.

Total Energies Marketing Nigeria non-strategic revenue closed 2021 at N4.48 billion, an increase of 330.61% from N1.04 billion in 2020.

The company reported total operating expenses of N33.4 billion in 2021, an increase of 19.2% from the N28.02 billion reported in 2020. The breakdown revealed that selling expenses and distribution grew by 9.06% to N3.23 billion in 2021 from N2. 0.96 billion in 2020, while administrative expenditure increased by 19.15% to 30.16 billion naira in 2021 from 25.05 billion naira in 2020.

In terms of finance, the oil marketing company reported a 62% decline in finance income to N841.04 million in 2021 from N2.26 billion in 2020. Finance costs also fell by 39% to 1.77 billion naira in 2021 from 2.9 billion naira. billion in 2020.

This brings net finance charges to N938.6 million in 2021, a growth of 49% from the N629.18 million reported in 2020 due to soaring finance charges.

Overall, the company recorded a pre-tax profit of N24.8 billion during the period, compared to N2.91 billion reported in 2020. A tax charge of N7.9 billion resulted in a profit after tax of N16.86 billion during the period under review. against 2.06 billion naira reported in the previous year’s results.

Analysts view

According to analysts at Cordros security, Total Energies’ performance is commendable as the company’s earnings have shown strong resilience, driven primarily by its high volume of play in fiscal 2021.

They added, “Furthermore, we appreciate that the company has maintained its focus on reducing financial costs, which weighed heavily on earnings in the pre-pandemic era. However, we note that declining margins may be a recurring theme going forward, following the reinstatement of the PMS price cap and cost pressures due to rising crude oil prices. We await the publication of the audited results for a declaration of dividend. Our estimates are currently being revised.

About Clara Barnard

Check Also

Campus derives 37% of its gross revenue from online sales in the first nine months of FY22

The initial public offering linked to sports shoe producer Campus Activewear saw its online sales …