Mobil Oil profit slumps 99.28 % on exceptional item

Mobil Oil Plc reported a 99.28 per cent decline in net profit in the first quarter of this year compared to a year ago as the downstream oil and gas giant booked an exceptional loss above N2 billion.

The company recorded the loss as it migrated a significant portion of its Defined Benefit Scheme to Defined Contribution Scheme.
“This represents the actuarial loss recognized in the balance sheet,” said the company.

Net income was N13.51 million in 2017 as against N1.81 billion the previous year. Sales increased by 11 per cent to N25.16 billion as the company continues to intensify its expansion plans to unlock shareholders’ value.
A BusinessDay poll of 10 analysts had forecast a net profit of N800 million.

Mobil’s net margins, a measure of efficiency, declined to 0.53 per cent in March 2017 from 7.98 per cent as at March 2016.
Earnings before interest and tax (EBIT) margin dropped to 8.38 per cent in the period under review from 11.21 per cent the previous year.
NIPCO Limited, a subsidiary of NIPCO Plc, had paid $301 million to Exxon Mobil for 60 per cent of the Nigerian downstream oil and gas firm.  Analysts say the acquisition by NIPCO will help strengthen the company’s balance sheet.
“Mobil Oil will benefit from such acquisition because NIPCO is very strong on the LPG side,” said Dolapo Oni, Head of Energy Research at Ecobank Group.
Experts say the takeover shows net importers of petroleum products have come to the realization that the outlook for the industry is unsavoury as the government plans to stop curtail the importation of refined petroleum products by repairing local refineries.

Nigeria plans to raise $1.2 billion to upgrade its oil refineries, aiming to end a reliance on oil product imports by 2019, according to Ibe Kachikwu, Nigeria’s minister of state for petroleum resources

Also, the completion of Dangote refinery by 2019 is expected to further compound the woes of importers.
Mobil and other downstream oil and gas firms are groaning under huge debts as government continues to delay subsidy payment. The refusal of the Central Bank of Nigeria (CBN) to pay subsidy arrears and foreign exchange differential of $1.2 billion has hindered the firms from honouring obligations to banks.
Analysts say the big companies like Mobil, Total Nigeria, and Forte Oil can weather the storm because of their robust cash flows and supports from their parent companies.
Cash pile at Nigeria’s downstream oil and gas firms are shrinking.
Pressured by payment of liabilities, Mobil Oil’s cash and equivalent fell by 45.16 per cent to N4.62 billion in the period under review from N8.44 billion as at March 2016.
There is no threat to Mobil Oil’s going concern as its capitalization ratio fell to 61.19 per cent in March 2017 from 65.90 per cent as at March 2016. Total payables were flat at N9.68 billion.

Mobil Oil’s share price gained 4.84 per cent to close at N300.90 as of Friday, valuing the company at N108.50 billion. Year to date (YTD) as (+7.85 per cent), underperforming the NSE ASI’s 23.25 per cent.

 
BALA AUGIE