Eterna’s cash from operations turns negative for first time in 4 years

Eterna Plc, a downstream oil and gas company in Nigeria, has reported a loss in its operating activities for the first time in four years, according to data compiled by BusinessDay.

The company’s latest financial statement shows that it recorded a negative cash flow generated from operating activities of N2.03 billion last year, compared to a positive N1.66 billion in 2022.

A negative cash flow from operating activities suggests that the company is not operating profitably and faces challenges in repaying creditors and securing financing for asset replacement or business expansion.

Despite the challenges, the oil company saw an increase in revenue to N183.4 billion from N116.5 billion. This growth was primarily driven by higher fuel prices following the removal of petrol subsidy.

Specifically, fuel sales revenue surged to N164.6 billion in 2023, a 71 percent increase from N96.5 billion in 2022, however, the growth in fuel sales revenue was offset by a corresponding 66 percent increase in fuel cost of sales to N150.3 billion from N90.4 billion.

Revenue from lubricants also rose by 21.5 percent to N18.56 million, while revenue from other sources decreased to N223.49 million.

Additionally, operating expenses rose by 32.3 percent to N8.89 billion, largely due to increased advertising expenses.

Total assets increased to N60.96 billion from N53.99 billion, total liabilities increased to N57.35 billion from N40.86 billion.

Further analysis of the firm’s statement shows that net cash generated from financing activities increased to N10.43 billion from N4.72 billion, but the group’s cash and cash equivalents decreased by 38.2 percent to N6.9 billion from N10.8 billion.

Eterna also reported a foreign exchange loss of N15.43 billion and incurred an after-tax loss of N9.33 billion from a profit of N1.01 billion.

Other income declined to N61.3 million from N232.4 million, while finance income, including interest income on short-term bank deposits, declined to N39.6 million from N41.04 million.

Finance costs surged to N1.53 billion from N690.27 million, primarily due to increased interest on loans. Earnings per share recorded a negative N7.16 kobo from a positive N0.70 kobo.