Since the economic recession about 4 years ago, 8 of the biggest oil and gas companies listed on the Nigerian Stock Exchange have seen their aggregate profits bounce back from a loss position of N39.1 billion in 2016 to an accumulated profit position of N110.1 billion in 2019. But while things have been rosy for some, others have felt the thorns of higher inflation, exchange rate devaluation, weaker oil prices, and slow economic growth.
Among the 8 companies, only 5 have seen their profitability soar beyond 2016 levels, and about three oil companies are yet to recover to their 2016 levels 3 years into Nigeria’s economic recovery.
The three oil companies yet to see their profits bounce back to 2016 levels are Total, Conoil, and MRS. With the economy expected to tumble into another recession later in 2020, analysts worry that things may quickly become uglier for these companies if management does not figure out a way to turn things around speedily.
Since 2016 Total Nigeria has seen its profit after tax declined for three consecutive years as the oil company recorded a whopping 83.63% decline in PAT from NGN14.79B in 2016 to NGN2.42B in 2019. The decline can be traced to the consistent growth in cost and slightly weaker revenue. The oil firm recorded a cost to income ratio of 59% in 2016 as compared to a cost to income ratio of 72% in 2019, as revenue marginally dropped by 0.02%.
Conoil despite recording a 64.38% growth in revenue between 2016 and 2019, has seen a 30% drop in its profit after tax within the same period. In 2018 the company recorded a cost to income ratio of 85%, between 2016 and 2019 the company has seen cost of sales grow by 77.82% compared to revenue which grew by 64%.
MRS after posting a record profit of NGN1.46B in 2016, MRS has recorded accumulated losses of NGN2.3B in the last two years. In 2017 profit dropped by 5.23% to NGN1.38B but in 2018 and 2019 the company recorded losses of –NGN1.2B and –NGN1.1B respectively. The company saw a revenue drop of 41% between 2016 and 2019 which weighed heavily on the company’s profitability. The company recorded company tax credit of almost NGN3B between 2017 and 2019 but it wasn’t enough to prevent the company from making a loss in 2018 and 2019.
