Ardova, Eterna, and MRS recorded the highest cost-of-sales ratio which implies their cost of sales took out most of their revenues compared to their peers, BusinessDay’s findings have shown.
According to Investopedia, the cost of sales ratio is a financial ratio that compares a company’s expenses generated by sales activity to its revenue.
It represents the proportion of revenue that is used up for costs incurred to generate that revenue. The lower the value of cost to sales ratio, the better it is for the business.
Data sourced from Nigeria’s downstream sector showed firms recorded huge input costs which took out a large chunk of their revenues in the reviewed period.
The downstream firms – Ardova, Eterna, MRS, Conoil, and Total Energies recorded 94.7 percent, 93.2 percent, 91.1 percent, 88.4 percent, and 86.8 percent cost of sales ratio in the nine months period of 2022.
Firm-by-firm analysis
Ardova
Ardova led its peers with a cost-of-sales ratio of 94.7 percent which implies the firm’s cost of sales took out 94.7 percent of its total revenue in the nine months of 2022.
This indicates a 220 percent basis points increase from 92.5 percent in the nine months of 2021.
Ardova’s revenue stood at N182.59 billion in the nine months of 2022, a 34.1 percent increase from N136.10 billion in the same period of 2021.
Cost of sales to N172.84 billion, up 37.2 percent from N125.93 billion in the comparable periods.
Eterna
Eterna’s cost of sales ratio stood at 93.2 percent in the nine months of 2022 from 93 percent, indicating an increase of 20 basis points.
The firm’s revenue grew by 50 percent to N91.93 billion from N61.37 billion in the comparable periods.
Eterna recorded a cost of sales of N85.71 billion, a 50.2 percent increase from N57.05 billion in the reviewed period.
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MRS
MRS cost of sales ratio stood at 91.1 percent, a 220 basis points dip from 93.3 percent in the same period of 2021.
The downstream firm’s revenue surged 30 percent to N69.15 billion from N53.23 billion in the comparable periods.
The firm’s cost of sales jumped 27 percent to N63.03 billion in the nine months of 2022 from N49.69 billion in the nine months of 2021.
Conoil
Conoil’s cost-of-sales ratio dropped 360 basis points to 88.4 percent from N92 percent in the nine months of 2021.
Revenue dropped 10.6 percent to N90.29 billion in the nine months of 2022 from N100.98 billion in the same period of 2021.
The cost of sales dropped 14.1 percent to N79.85 billion from N92.94 billion in the corresponding period of 2021.
Total Energies
Total Energies cost of sales ratio amounted to 86.8 percent in the nine months of 2022, indicating a 360 percent basis points increase from 83.2 percent in the nine months of 2021.
The firm’s revenue to N337.19 billion in the nine months of 2022, a 39.2 percent increase from N242.22 billion in the same period of 2021.
Cost of sales to N292.53 billion, a 45 percent increase in the nine months of 2022 from N201.64 billion in the nine months of 2021.
