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Three oil firms’ earnings per share rises 120% as fuel prices soar

Three oil firms’ earnings per share rises 120% as fuel prices soar

The earnings per share (EPS) of three listed oil marketing companies rose by 119.7 percent in the first quarter of 2024, an analysis by BusinessDay shows.

The firms are Conoil Plc, TotalEnergies Marketing Nigeria Plc, and MRS Oil Nigeria Plc. The growth in their EPS underscores the sector’s strong financial performance from a combination of rising energy prices, increased demand, and strategic operational efficiencies.

According to the latest financial statements of the companies, TotalEnergies Marketing Nigeria reported the highest amount of EPS, rising to N33.8, up from N12.2. Conoil with N6.26 in Q1 from N4.34 in the same period of 2023. and MRS Oil was in third place with N5.8 from N4.3.

Their combined EPS rose to N45.93 in the first quarter of this year from N20.9 in the same period in 2023.

EPS is a company’s net profit divided by the number of common shares it has outstanding. It indicates how much money a company makes for each share of its stock and is a widely used metric for estimating corporate value.

A higher EPS indicates greater value because investors will pay more for a company’s shares if they think the company has higher profits relative to its share price.

“Conoil, TotalEnergies, and MRS’ rise in their earnings per share indicates that the companies are generating higher profits,” Kingsley Amanze, an oil and gas financial expert said.

“This can result from increased revenues, improved efficiency, higher demand for energy, or favourable market conditions. Investors often interpret rising earnings as a sign of financial health and potential for future growth, which can lead to increased investor confidence and higher stock prices. Additionally, higher earnings can provide firms with more capital to reinvest in their operations, pay down debt, or distribute to shareholders as dividends,” he added.

A breakdown of the companies’ statements disclosed that they reported a 119 percent rise in revenue to N439.8 billion from N200.8 billion during the reviewed period.

According to statements, the rise in their revenue indicates that the companies made sales from their petroleum products which include regulated gasoline and kerosene, diesel, aviation fuel, and low-pour fuel.

This has directly translated into higher profits amounting to 109.8 percent to N17.64 billion from N8.5 billion.

Eterna Plc reported a loss in profit amounting to N4.06 billion, which also led the EPS to decline. This indicates that the company’s expenses and costs exceeded its revenues, resulting in a financial loss for the period.

In May 2023, Africa’s most populous nation discontinued its costly petrol subsidy practice. President Bola Tinubu eliminated the subsidy in his inaugural address to the nation of more than 200 million people.

Since then, petrol prices in the country have more than tripled. According to the latest data from the National Bureau of Statistics, the average petrol price across Nigeria was N769.62 as of May 2024, a 223 percent increase from N238.11 in the same period of 2023.

Petrol, widely used by households and small businesses for powering generators, has also seen its price surge due to foreign exchange shortages and disruptions in the local distribution network.

The government’s efforts to stabilise the FX market, including collapsing the I&E window, have contributed to significant volatility and difficulties in sourcing dollars, a currency essential for purchasing crude oil in the global market, resulting in a rise in pump prices.

However, Nigeria continues to grapple with foreign currency shortages and an ongoing foreign exchange crisis, exacerbating challenges in the local distribution network and driving up the cost of petrol, industry experts say.

“A combination of higher exchange rate, higher oil price, and static retail price of petrol means higher petrol subsidy bill as Nigeria’s lack of refining capacity means it imports all the petroleum products it uses locally,” Charles Akinbobola, a Lagos-based energy analyst, said.

He added: “Nigeria’s petrol subsidy programme remains a contentious issue. While intended to cushion the blow of high pump prices for consumers, its true cost and funding mechanism are often shrouded in secrecy.”

Read also: NBS says average petrol price 100% in one year

Analysis of individual firms

TotalEnergies Marketing Nigeria

Total Energies’ earnings per share grew to N33.87 in the first quarter of 2024 from N12.26 in the first quarter of 2023.

The shares outstanding stand at 339.52 million, with a price which stood at N388.9 and a traded volume of 13,032 on Thursday.

The energy firm saw its profit after tax at N11.4 billion, a 176 percent rise from N4.1 billion in the comparable periods.

The company’s shareholder fund rose by 25 percent to N59 billion from N47.3 billion. Total Energies’ cash and cash equivalents increased to N134 billion in the first quarter of 2024, a 143 percent rise from N55 billion in the same period of 2023.

Conoil

Conoil reported an earning per share of N6.26 in the first quarter of 2024 from N4.34 in the same period of 2023.

The shares outstanding stand at 693.9 million, with a price which stood at N115 and a traded volume of 449,513 on Thursday.

The firm’s after-tax profit grew to N4.34 billion from N3 billion.

During the reviewed periods, Conoil’s shareholders’ funds experienced a significant boost due to a 39.9 percent increase in retained earnings, raising the company’s equity from N28 billion to N37.4 billion.

The oil and gas company reported a negative cash and cash equivalents of N11 billion from N5 billion.

MRS Oil

MRS Oil’s earnings per share grew to N5.80 in the first quarter of 2024 from N4.30 in the first quarter of 2023.

The shares outstanding stand at 342.8 million, with a price which stood at N132.65 and a traded volume of 3,688 on Friday.

The oil and gas marketer saw its profit after tax at N1.9 billion from N1.4 billion in the comparable periods.

During the reviewed periods, MRS Oil shareholders’ funds rose to N24.6 billion from N19.9 billion.

billion, a 111.5 percent rise from N5.2 billion.