TotalEnergies, Eterna and MRS have raked in N6.95 billion as a combined profit in the first three months of 2023 compared to N5.85 billion in the first three months of 2022.
This year, earnings are expected to get a boost from a possible removal of subsidy on petroleum products as sector players are reeling from inflationary pressures, foreign exchange liquidity constraints, and inadequate infrastructure.
Downstream oil and gas sector players have been losing money as the state oil corporation Nigerian National Corporation Limited (NNPLC) has been the sole importer of the premium motor spirit otherwise known as petrol.
But the industry dynamics is about with the coming on board of the 650,000 per barrel Dangote Refinery in the second quarter of this year; the refinery is expected to significantly shrink fuel scarcity and fix the dislocation in the downstream oil and gas sector that has been hamstrung by lack of investment.
Analysts at Cordros Securities remain optimistic about the downstream firm’s ability to deliver impressive earnings despite the plethora of challenges in the operating landscape.
This optimism is predicated on market leadership status; robust storage and distribution network, and strong balance sheet management.
“Nonetheless, we highlight that the price cap on PMS, the surge in crude oil prices and higher net finance costs will continue to inhibit profitability growth,’’ said analysts at Cordros Securities.
BusinessDay analysis showed TotalEngeries, Eterna and MRS collectively grew 11 percent of their total assets to N395.4 billion in the first three months of the year, from N356 billion in the comparable period of last year.
Here is a detailed breakdown of the performance of the downstream firms in the first quarter of 2023.
Total Energies
Total Energies reported an increase in revenue to N135.2 billion in the first quarter of 2023 as against N97.6 billion in the same period of last year. The company generates its revenue from petroleum products which is its major source of revenue, lubricants and others.
Total Energies reported a five percent decrease in its profit to N4.1 billion in March 2022 as against N4.36 billion in March 2022.
The Oil company’s cost of sales jumped 44.6 percent to N120.2 billion, more than N83.1 billion in the previous year.
Expenses on transport on sales for the first three months period on the company’s Selling & distribution cost declined by 26 percent to N915.9 million, compared to N1.16 billion in the period under review.
The firm’s administrative expenses saw a rise to N7.8 billion, coming from N7.56 billion in the preceding year.
Net cash generated from operating activities jumped to N29.8 billion from N4.9 billion in the comparable period. Net cash used in investing activities recorded a year-on-year loss of N39 million compared to N55 million in the period under review.
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Eterna
Eterna recorded a profit of N1.09 billion in the first quarter of 2023 as against N1.08 million in the first quarter of 2022.
The company earned a total revenue of N31.1 billion from its sales in trading activities, fuel, lubricants and others compared to N26.8 billion in Q1 2023, The cost of sales generated from its petroleum product increased to N27.6 billion in Q1 2023 compared to N24.5 billion in Q1 in the previous year.
Total assets rose by 25 percent to N61.4 billion as against N49.1 billion in the comparable period.
Selling and distribution expenses increased to N70 million compared to N33 million in the comparable periods, as a result of marketing and sales commission, sampling and analysis expenses that were incurred during the period under review
Net cash flow generated from its operating activities dipped by 61 percent to N3.4 billion in the first three months of 2023 from N8.8 billion reported in the same period of 2022.
The oil company also generated a net cash flow from financing activities of N4.8 billion in Q1 2023, as against N3.04 billion reported by the industry statistics in the first three months of 2022.
MRS Oil
MRS reported a 72 percent increase in revenue to N30.7 billion in Q1 2022 from N17.8 billion in the same period of 2022.
That surge was the major reason the Oil company made a profit of N1.4 billion in the first three months as against N41 million loss reported last year in the same period. The surge in revenue was as an increase in the sale of the products from its operating segments.
MRS cost of sales jumped 58.2 percent to N26.9 billion, more than N17 billion in the previous year.
Interest arising from short-term bank deposits and Net foreign exchange gain dipped the Oil’s company finance income by 61 percent to N16.2 million in the first quarter of 2023 from N42.3 million in the first quarter of 2022
Further breakdown of the company’s financial statement shows that total assets grew to N48 billion as against N35.9 billion in the preceding year.
