Total Nigeria profit surges 330.4% on strong sales

Total Nigeria profit surges 330.37 percent in the third quarter, thanks to strong sales recorded on the back of the new petroleum pricing regime announced by the Federal Government as the company lowered finance costs.

Net income was N11.63 billion in the period, compared with N2.79 billion a year earlier, the company said on the website of the Nigerian Stock Exchange (NSE). Sales were up 38 percent to N220.21 billion in the period under review.

The company’s profit also got a boost from a 143.61 percent reduction in interest on bank drafts and loans despite the threat of devaluation or weak currency on debt in its capital structure.

Experts say the decision of the Federal Government to deregulate the downstream sector of the Nigerian petroleum industry that saw the pump price of petrol move to about N145 has helped bolster the top lines of firms operating in the sector and has also paved the way for investment opportunities.

“However, the industry dynamics are changing and investors consider a liberated and deregulated downstream sector to be an attractive investment opportunity,” said Dolapo Oni head of Energy research at Ecobank.

The stellar performance of firms in the sector is making investment bankers bet on their stocks amid a macroeconomic headwind.  Nigeria’s economy shrank by 2.1 percent in the second quarter of 2016, according to the National Bureau of Statistics (NBS).

The IMF expects the economy to contract by 1.80 percent in 2016, the worst recession in 25 years.

Conoil Nigeria Plc, a major player in the industry recorded a 51.26 percent increase in net income while sales were up 6 percent.

Investors are increasingly buying into Total Nigeria’s equities as its year to date stood at (+91.27) while share price stands at N290 as of 1:30 pm on the floor of the exchange.

The petroleum marketers are doing well and they are good stocks, according to Eguarekhide Longe, managing director/CEO of AIICO Pension Mangers Limited, in a recent interview with BusinessDay.

Total Nigeria’s net margin, a measure of profitability and efficiency increased to 5.28 percent in September 2016 from 1.71 percent as at September 2015. Operating profit margin moved to 7.82 percent in September 2016 as against 2.52 percent as at September 2015.

The company’s operating profits surged by 325.43 percent to N17.23 billion as at September 2016 while gross profit jumped by 71.51 percent to N32.01 billion.

Total, as a group is active in the whole value chain of Oil & Gas: Upstream, Midstream and Downstream. The company has been serving the Nigerian hydrocarbons industry for more than half a century, in partnership with the Nigerian Government and in different equity associations with other private companies.