WED, JAN 31 2024-theGBJournal| TotalEnergies Marketing Nigeria Plc (TOTAL) published its Q4-23 unaudited financials reporting revenue growth of 46.9% y/y in Q4-23 (2023FY: +31.8% y/y).
The revenue growth is driven by an increase in its Network (+87.2% y/y | 54.0% of revenue) and General Trade (+24.4% y/y | 35.0% of revenue) business segments; while Aviation sales (-1.0% y/y | 11.0% of revenue) declined.
The improved performance in the network segment is attributed to the higher fuel prices – PMS: +223.1% y/y; AGO: +31.8% y/y; and DPK: +22.4% y/y – in the period.
Disaggregating by products, the marketer recorded broad base expansion across the petroleum products (+56.2% y/y | 85.7% of revenue) and lubricants and other (+8.2% y/y | 14.3% of revenue) products.
On a q/q basis, revenue increased by 44.2% following gains across the Network (+44.2% q/q), General Trade (+44.2% q/q), and Aviation (+44.2% q/q) business segments.
Gross margin expanded by 136bps y/y to 12.0%, highlighting the higher product prices. We note that cost pressures remained intact, as the cost of sales increased by 44.6% y/y, driven by net changes in inventories (+32.1% y/y).
Consequently, EBITDA (-326bps y/y) and EBIT (-295bps y/y) margins declined to 2.9% and 1.9%, respectively, following a 93.5% y/y increase in operating expenses coupled with substantial FX losses.
Net finance cost surged by 139.6% y/y to N2.96 billion (Q4-22: N1.24 billion) due to a 118.3% y/y increase in finance cost.
Analysts at Cordros Research highlight that the increased finance cost was primarily facilitated by the higher balance in interest on other loans (+129.4% y/y) and interest on bank overdrafts (N2.30 billion vs Q4-22: Nil).
Meanwhile, finance income grew by 86.1% y/y, supported by higher interest on deposits (+75.9% y/y), interest on other loans (+34.2% y/y), and interest on deposits for unclaimed dividends (+4.7% y/y).
Overall, profit before tax declined by 82.7% y/y to N992.89 million (Q4-22: NGN5.75 billion). Following a tax expense of N1.12 billion, profit after tax printed N2.11 billion (Q4-22: N3.61 billion).
Standalone EPS fell by 41.6% y/y to N6.22 in Q4-23 (Q4-22: N10.64) undermined mainly by an uptick in net finance cost (+139.6% y/y) and FX losses (N11.50 billion vs FX gains of N71.88 million in Q4-22).
As a result, the 2023FY EPS settled lower at N38.09 (2022FY: N47.47).
”TOTAL’s 2023FY performance mirrors the numerous challenges prevalent in the downstream oil and gas sector, with the primary issues being the FX losses and escalating finance costs that partly dragged the company’s earnings,” says Cordros.
Meanwhile, while many anticipate the company to demonstrate resilience by leveraging its market leadership position in the downstream oil and gas sector, they also anticipate the cost pressures stemming from the unfavourable macroeconomic conditions to impede the company’s performance into 2024FY.
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