Eterna Plc is forecasting a pre-tax profit of N2.3 billion for the full year of 2024, marking a return to profitability after posting a N12 billion pre-tax loss in FY 2023.
According to the company’s forecast for the fourth quarter of 2024, it projects a pre-tax profit of N298 million and a net income of N36.9 million during the last quarter of the year. Overall, it is projecting a net income of N962.1 million for the 2024 financial year, which represents a significant improvement from the N9.4 billion net loss posted in 2023.
The company is projecting a 47% rise in revenue from 2023, with a forecasted revenue of N268.9 billion, compared to N183.3 billion in FY 2023. There is also a projected 88% increase in gross profit, with the gross margin expected to rise from 9% in FY 2023 to 12% by the end of the 2024 financial year.
Although the company is forecasting a return to profitability in 2024, it should be noted that Eterna Plc is currently experiencing a series of losses as of the first half of the year.
Eterna posted a pre-tax loss of N3.6 billion in the first half of 2024, a 36% improvement from the N5.5 billion pre-tax loss posted in H1 2023. However, the company reported a revenue of N147.5 billion for H1 2024, reflecting a 113% year-on-year increase from the N69.3 billion revenue posted in H1 2023.
The company recorded a net loss of N4.8 billion for H1 2024, representing an 18% year-on-year improvement from the N5.9 billion net loss recorded in the corresponding period in 2023.
Despite improved revenue generation and a 166% year-on-year growth in operating profit to N12.9 billion during the half-year, Eterna’s bottom line was affected by a net foreign exchange loss of N14.46 billion, as the exchange rate fluctuated between N900/$ and N1,600/$ during the half-year.
In its projections for the fourth quarter, the company anticipates exchange rates to range between N1,550 and N1,650 to the dollar, while oil prices are expected to fluctuate between $75 and $90 per barrel. In its cash flow projections, Eterna is forecasting a net cash increase of N3.69 billion by the end of the 2023 financial year, with the bulk of the sum expected from financing activities.
As part of its projections, the company noted that it would continue its investment in gas (LPG/CNG) as well as aviation fuel during the last quarter of 2024.
Not Yet Uhuru for Shareholders
This projected return to profitability does not indicate a potential return to dividend payments for the company’s shareholders, as its accumulated losses at the end of H1 2024 amounted to N7.78 billion. As of H1 2024, Eterna Plc was operating in a negative net asset position with a negative equity of N1.3 billion. The company is also battling illiquidity, with its negative working capital amounting to N18.3 billion at the end of H1 2024.
Despite the slim probability of a dividend payment for FY 2024, Eterna Plc has been one of the best performers on the NGX in 2024, with a year-to-date return of 117% as of September 6.
Currently, the company’s share price is trading at an all-time high of N31.90. The growth in Eterna’s share price has been instrumental in the 81% year-to-date growth of the NGX Oil/Gas Index.
This year, Eterna Plc has undergone significant changes. Its former Managing Director/CEO, Benjamin Nwaezeigwe, resigned after two years in charge. He was replaced by Abiola Lukman Lawal, who previously served as Chief Strategy Officer of Oando Plc during the company’s transition from a downstream to an upstream/gas company. The company also announced a new Chief Financial Officer in January 2024.
Despite the limited mention of Dangote Refinery in the company’s Q4 2024 projections, Eterna Plc was among the first firms named as an official sales distributor for the refinery. With the refinery increasing its production of premium motor spirit (PMS), Eterna’s foreign exchange exposure is expected to decline as the company starts sourcing products directly from the refinery.
