Petrol marketers' profits double on subsidy removal

Nigeria’s major oil marketers listed on the Nigerian Exchange (NGX) successfully navigated rising operational expenses, achieving more than 100 percent year-on-year growth in their nine months’ net profits, thanks to subsidy removal.

The partial and full subsidy removal from May 2023 jacked up petrol prices, resulting in more revenues and profits for major oil marketers. The petrol price has hovered from 200/litre since late May 2023 to over 1000/litre in November 2024.

The downstream oil companies listed on the NGX are: TotalEnergies Marketing Nigeria, MRS Oil Nigeria, Eterna Plc, and Conoil Plc. In the nine months ending September 30, 2024, the four companies posted a cumulative profit after tax of N45.3 billion, representing a significant 146 percent year-on-year growth from the N18.5 billion posted in the corresponding period of 2023.

TotalEnergies Marketing Nigeria posted the highest profit generated by any oil marketer during the nine-month period, with a N27.4 billion net profit, representing a 153 percent year-on-year growth from the N10.8 billion net profit recorded in 9M 2023. The company also recorded the highest revenue of any downstream oil company during the period, generating N793.9 billion in revenue.

Total’s revenue was 88 percent year-on-year higher than the N422.6 billion revenue generated in 9M 2023.

Following TotalEnergies was Conoil, which posted a net profit of N11.3 billion during 9M 2024, representing a 30 percent year-on-year growth from the N8.7 billion net profit posted in 9M 2023. Conoil recorded revenue of N249.1 billion during the period, which was 81 percent higher than the N137.9 billion revenue recorded in the corresponding period in 2023.

MRS Oil posted an N248.7 billion revenue during the nine months, representing a 147 percent year-on-year growth from the N100.9 billion revenue posted in 9M 2023. With a gross profit of N18.8 billion, MRS recorded a net profit of N6.2 billion which represented an 81 percent year-on-year growth from the N3.4 billion net profit posted in 9M 2023.

Eterna also bounced to profitability, with a net profit of N338 million recorded in the nine months of 2024, representing a 108 percent year-on-year growth from the N4.5 billion net loss posted in 9M 2023. The company’s revenue during the period was N233.8 billion, reflecting a 90 percent year-on-year increase from the N123.3 billion revenue posted in the corresponding period in 2023.

Most of the profits posted by these companies were driven by a rise in fuel prices owing to the removal of petrol subsidies in 2024. For example, Conoil’s revenue from fuel rose by 83 percent year-on-year to N244.5 billion, from N133.6 billion as of 9M 2023. MRS Oil’s revenue from PMS alone during the nine months was about N218 billion, marking a 153 percent year-on-year growth from the N86.2 billion recorded in 9M 2023.

The profit growth recorded by these companies was irrespective of a 63 percent growth in operating expenses, as they recorded a cumulative operating expense of N79.1 billion during the nine months, in contrast with N48.6 billion recorded in 9M 2023. TotalEnergies Marketing Nigeria recorded the largest operational expenses during the period under review, with N56.8 billion, representing a 71 percent growth from the N33.1 billion operational costs recorded in 9M 2023.

However, MRS Oil recorded the highest jump in operational costs, which grew by 77 percent to N7.1 billion during the nine months, from N4 billion as of 9M 2023.

Eterna’s operational costs grew marginally by 5 percent year-on-year to N6.7 billion, from N6.4 billion as of 9M 2023. Conoil’s operational expenses rose by 66 percent year-on-year to N8.4 billion as of 9M 2024, from N5.1 billion as of 9M 2023.

The increase in operational expenses was driven by sharp rises in either distribution or administrative costs, as soaring petrol and diesel prices caused substantial year-on-year hikes in freight expenses. For example, Conoil’s distribution expenses during the nine months were N4.1 billion, marking a 189 percent year-on-year appreciation from the N1.3 billion recorded in 9M 2023. Freight costs totalling N3.9 billion drove the company’s distribution expenses. Despite having a similar capacity to Conoil, MRS Oil Nigeria reported freight expenses of less than half of Conoil’s over the nine-month period. MRS recorded a freight expense of N1.75 billion, marking a 69 percent year-on-year increase from the N1.03 billion reported in 9M 2023.

For MRS, most of its operational costs were driven by administrative expenses which appreciated by 83 percent year-on-year to N6.4 billion, from N3.5 billion recorded in 9M 2023. Apart from freight costs, the company’s selling and distribution expenses increased 43 percent year-on-year to N796 million, from N538 million as of 9M 2023.

The soaring petrol price was also observed in MRS’ administrative petrol cost, as the company’s fuel expenses for office use during the nine months hit N829.8 million, marking a 126 percent year-on-year from the N367.8 million recorded last year.

TotalEnergies’ operational costs were majorly driven by its administrative expenses, which appreciated by 55 percent year-on-year to N45.3 billion for 9M 2024, from N29.2 billion as of 9M 2023. However, the impact of rising fuel prices was felt, as the transportation cost for products appreciated by 189 percent year-on-year to N11.5 billion, from N4 billion as of the corresponding period in 2023.

A remarkable observation concerning TotalEnergies was the N6.6 billion consultancy expense incurred during the period. This marks a 293 percent year-on-year growth from the N1.7 billion spent on a similar item in the same period of 2023.

Administrative costs were also the driving force for Eterna’s operational costs, as the group incurred N6.4 billion cost in the item while its selling and distribution expenses stood at N285.6 million.

During the nine months under review, there was a cumulative increase in their inventories, as the companies looked to shore their petroleum product stock. During the nine-month period, the four companies expended N78.6 billion on increasing their inventory stock, with TotalEnergies leading this charge.

TotalEnergies spent N67.7 billion on increasing its inventory, which hit N141.2 billion, from N73.9 billion at the start of the year.
However, Eterna sold off about N5.3 billion of its inventories, while Conoil spent N14.5 billion on shoring up its inventory.

In addition to fuel sales, these companies are also engaged in the production of lubricants. However, over 90 percent of their revenue still comes from fuel.

With the launch of PMS production at the Dangote refinery in October and indications of an end to NNPCL’s role as Nigeria’s sole petrol importer, the impact of direct petrol sourcing on these companies’ bottom lines remains to be seen.

Currently, Conoil Plc, TotalEnergies Marketing Nigeria, and MRS Oil belong to the Major Oil Marketers Association of Nigeria (MOMAN), while Eterna Plc belongs to the Depot and Petroleum Product Marketers Association of Nigeria.