TotalEnergies Marketing Nigeria Plc (TOTAL) published its Q2-23 unaudited financials yesterday (27 July), reporting an 11.1% y/y growth in Q2-23 standalone EPS to NGN13.62/s (Q2-22: NGN12.26/s), supported primarily by the 25.1% y/y growth in revenue. Accordingly, the H1-23 EPS came in at NGN25.88 (H1-22: NGN25.12).
Revenue grew by 25.1% y/y in Q2-23 (H1-23: +31.4%), underpinned by the growth across the Network (+44.0% y/y | 59.0% of revenue) and General Trade (+10.8% y/y | 31.1% of revenue) business segments. Meanwhile, revenue from the Aviation business segment (-2.6% y/y | 10.0% of revenue) declined. We highlight that the improved performance was driven by the growth in fuel prices – PMS: +99.0% y/y; AGO: +21.5% y/y; and DPK: +77.2% y/y – in the period.
Across TOTAL’s product lines, revenue from petroleum products increased by 34.4% y/y (76.2% of revenue), while revenue from lubricants and other lines grew by 5.5% y/y (23.8% of revenue). Sequentially, on a q/q basis, revenue settled higher by 3.0%, primarily supported by the Network business (+23.7% q/q), amid declines from the General Trade (-17.8% q/q) and Aviation (-13.9% q/q) business segments.
Gross profit margin expanded by 63bps y/y to 14.4% in Q2-23, as revenue (+25.1% y/y) grew faster than the cost of sales (+24.1% y/y). We note that the cost pressures were stoked by the volatility in crude oil prices, amid a marginal increase in transportation costs (+0.3% y/y) and a decline in customs duties (-19.6%). Nonetheless, EBITDA (-60bps) and EBIT (-33bps) margins both contracted to 7.3% and 5.9%, respectively, following a 26.3% y/y increase in operating expenses and a heavy balance in FX loss (NGN1.50 billion | Q2-22: 70.96 million).
Net finance cost increased by 55.6% y/y to NGN1.13 billion (Q2-22: NGN726.89 million), primarily due to a 40.4% y/y increase in finance cost, amid a 15.2% y/y growth in finance income. We highlight that the outturn reflects a higher balance in interest on imports loans (+199.0% y/y), other loans (+32.8% y/y), and lease liabilities (+9.9% y/y).
Overall, the company recorded a profit before tax of NGN7.05 billion, representing a 14.1% y/y increase from the NGN6.18 billion recorded in Q2-22. Following a tax expense of NGN2.43 billion, profit after tax printed NGN4.62 billion, translating to an 11.1% y/y increase from the prior period (Q2-22: NGN4.16 billion).
Comment: In the views of Cordros Capital, TOTAL’s performance continues to show resilience, with the company recording positive earnings amid the plethora of challenges in the business environment. For the rest of the year, we expect TOTAL to remain resilient with possibly better profitability margins as we expect to see the full impact of the deregulated downstream oil and gas market on the company’s numbers. Notwithstanding, we expect cost pressures to remain a strong headwind through the year.
