MON 31 JAN, 2022-theGBJournal- Event: Total Energies Plc (TOTAL) released its Q4-21 unaudited results on Friday (January 28), reporting an Earnings Per Share (EPS) of NGN9.84 in Q4-21 (vs NGN4.59 in Q4-20) following significant revenue growth and lower finance costs.
For 2021FY, the EPS came in at NGN49.26 (2020FY: NGN6.07), recording a supernormal growth of 711.9%. The achieved revenue was in line with our estimate (-0.3% variance).
However, the EPS outturn surpassed our estimate by 66.0%, owing to a positive surprise in cost of sales.
Revenue increased by 86.6% y/y to NGN98.94 billion – the highest quarterly outturn ever – owing to (1) the increase in demand from consumers for the festive season, (2) TOTAL’s volume drive in 2021FY and (3) higher product prices. Accordingly, substantial increases were recorded across the business segments – (Network: +49.0% y/y; General Trade: +190.8% y/y; Aviation: +214.4% y/y).
On a q/q basis, revenue increased by 8.9%, with all business segments – Network (+20.2%) and Aviation (+8.9%) – save for the General Trade (-4.1%) recording growth.
Gross margin (-377bps) declined to 14.6% as the uptick in crude oil prices (Average Brent price: USD79.66/bbl in Q4-21 vs USD45.26/bbl in Q4-20) led to a faster increase in the cost of sales (95.3% y/y) than revenue. Notwithstanding, EBIT (+108bps) margin came in higher at 5.3%, amid a 24.8% y/y increase in operating expenses. However, EBITDA margin declined by 42bps to 7.2%.
Net finance cost declined significantly by 95.0% y/y, following a 635.2% y/y surge in finance income. On the other hand, finance cost increased by 52.5% y/y to NGN497.81 million.
Overall, the company recorded a PBT of NGN5.27 billion in the period (Q4-20: NGN2.00 billion). A NGN1.93 billion tax expense resulted in PAT of NGN3.34 billion in the period (Q4-20: NGN1.56 billion).
‘’TOTAL’s performance is laudable as the company’s earnings showed strong resilience, majorly driven by its strong volume play in 2021FY,’’ says Cordros Research.
According to Codros, ‘’we like that the company sustained its drive to lower finance costs which was a major drag on earnings in the pre-pandemic era. However, we highlight that the decline in margins may be a recurrent theme going forward, following the reinstatement of the PMS price cap and cost pressures owing to the uptick in crude oil prices. We await the release of the audited results for a dividend declaration.’’
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