Downstream firms Q1 results: The good, bad and ugly

Nigeria’s downstream oil and gas sector saw a mixed bag of results in the first quarter of 2023. Some firms saw their profits increase, while others saw their profits decline.

BusinessDay analysis showed Conoil recorded the highest profit margin of 8.61 percent, MRS Oil (4.81%), Eterna (3.53%), and Total Energies (3.08%).

Profit margin measures how much net income or profit is generated as a percentage of revenue. It is the ratio of net profits to revenues for a company or business segment.

Analysts said now is the best time to buy downstream oil and gas stocks and add to your portfolio as the abrupt removal of the subsidy on Premium Motor Spirit (PMS) by the newly elected president Bola Tinubu is expected to bolster sector players’ earnings, which paves the way for them to pay a bumper dividend.

Already, these firms are among the best performers on the NGX all-share index (ASI), which means investors had wagered on them and anticipated sector reforms that are ongoing.

The downstream firms which include Conoil, MRS Oil, Eterna, and Total Energies collectively raked in revenue of N232.22 billion, which indicates a 37.8 percent increase from N168.48 billion in the first quarter of 2022.

The firms’ cost of sales soared 37.7 percent to N203.85 billion in the first quarter of 2023 from N147.99 billion in the first quarter of 2022.

Firm-by-firm analysis

Good

Conoil

Conoil’s profit margin stood at 8.61 percent in the first quarter of 2023, 648 basis points increase from 2.13 percent in the same period of 2022.

The oil firm’s profit jumped 437 percent to N3.01 billion from N0.56 billion in the reviewed period.

Conoil’s revenue grew to N34.97 billion in the first quarter of 2023, a 33.7 percent increase from N26.15 billion in the same quarter of 2022.

The firm’s cost of sales, however, claimed 82.8 percent of total revenue in the first quarter of 2023, a 630 percent decline from 89.1 percent in the first quarter of 2022.

Cost of sales rose to N28.96 billion in the first quarter of 2023, up 24.2 percent from N23.31 billion in the first quarter of 2022.

MRS Oil

MRS Oil’s profit margin stood at 4.81 percent in the first quarter of 2023, 458 basis points increase from 0.23 percent in the first quarter of 2022.

The firm’s profit rose to N1.48 billion in the first quarter of 2023, a 3600 percent increase from N0.04 billion in the same period of 2022.

MRS Oil’s revenue stood at N30.79 billion in the first quarter of 2023, a 72 percent increase from N17.9 billion in the first quarter of 2022.

The firm’s cost of sales claimed 87.6 percent of total revenue in the first quarter of 2023, 760 basis points decline from N95.2 percent in the first quarter of 2022.

The cost of sales climbed 58 percent to N26.98 billion from N17.04 billion in the period reviewed.

Read also: Developing countries face $4 trn investment deficit meeting SDGs – UNCTAD

Bad

Eterna

Eterna’s profit margin stood at 3.53 percent in the first quarter of 2023, a 53 percent decline from 4.06 percent in the first quarter of 2022.

The firm’s profit to N1.1 billion, a 0.9 percent increase from N1.09 billion in the reviewed period.

Eterna’s revenue grew to N31.18 billion in the first quarter of 2023, a 16.3 percent increase from N26.82 billion in the first quarter of 2022.

The firm’s cost of sales claimed 88.6 percent of total revenue in the first quarter of 2023, 280 basis points decline from 91.4 percent in the same quarter of 2022.

Cost of sales increased to N27.64 billion in the first quarter of 2023, a 12.7 percent increase from N24.52 billion in the first quarter of 2022.

Ugly

Total Energies

Total Energies’ profit margin stood at 3.08 percent in the first quarter of 2023, 140 basis points decline from 4.48 percent in the first quarter of 2022.

The firm’s profit after tax arrived at N4.16 billion in the first quarter of 2023, a 4.81 percent decline from N4.37 billion in the same period of 2022.

Total Energies’ revenue stood at N135.28 billion, up 38.6 percent from N97.61 billion in the period reviewed.

Cost of sales claimed 88.9 percent of total revenue in the first quarter of 2023, a 370 basis points increase from 85.2 percent recorded in the same period of 2022.

Cost of sales increased to N120.27 billion, a 44.7 percent increase from N83.12 billion in the period reviewed.

Total Nigeria Plc is a marketing and services subsidiary of TotalEnergies; a multinational energy company operating in more than 130 countries and committed to providing sustainable products and services for its customers.