Total Nigeria reports 48.9% y/y decline in standalone EPS to NGN5.99 in Q3-23
TOTAL published its Q3-23 unaudited financials on 26 October), reporting a 48.9% y/y decline in standalone EPS to NGN5.99 in Q3-23 (Q3-22: NGN11.71) – the lowest since Q4-20 (NGN5.14) – affected mainly by an uptick in net finance cost (+23.6% y/y).
As a result, the 9M-23 EPS settled lower at NGN31.87 (9M-22: NGN36.83).
Revenue grew by 15.4% y/y in Q3-23 (9M-23: +25.3% y/y), driven primarily by an increase in its Network (+41.3% y/y | 54.0% of revenue) sales. Meanwhile, revenue declined across the General Trade (-2.1% y/y | 35.0% of revenue) and Aviation (-13.2% y/y | 11.0% of revenue) business segments. Notably, we attribute the improved performance in the network segment to the increased fuel prices – PMS: +224.5% y/y; AGO: +8.0% y/y; and DPK: +50.5% y/y – in the period, while the weak macroeconomic environment pressured demand across the General trade and Aviation segments. Analyzing the products classification, the marketer recorded broad base expansion from petroleum products (+16.9% y/y | 77.9% of revenue) and lubricants and other (+10.7% y/y | 22.1% of revenue) sales.
On a q/q basis, revenue increased by 6.2% following gains from the General Trade (+19.5% q/q) and Aviation (+16.5% q/q) business segments, despite a 2.6% q/q decline in the Network segment.
Remarkably, the gross margin expanded by 266bps to 14.2%, as the revenue growth for the period outpaced the increase in the cost of sales (+12.0% y/y). We highlight that the cost pressures in the period were influenced by the elevated crude oil prices (Average Brent price: USD85.92/bbl in Q3-23 vs USD97.70/bbl in` Q3-22). Meanwhile, EBITDA (-266bps) and EBIT (-254bps) margins declined to 4.4% and 3.0%, respectively, following a 44.5% y/y increase in operating expenses.
Net finance cost surged by 23.6% y/y to NGN1.35 billion (Q3-22: NGN1.09 billion), due to a 69.2% y/y increase in finance cost. We highlight that the increased finance cost was primarily facilitated by the higher balance in interest on import loans (+42.1% y/y) and other loans (+94.5% y/y). Meanwhile, finance income grew by 226.5% in the period supported by higher interest on deposits (+69.9% y/y), interest on other loans (+9.1% y/y), and interest on deposits for unclaimed dividends (+7.9% y/y).
Overall, profit before tax declined by 48.0% y/y to NGN3.15 billion (Q3-22: NGN6.05 billion). Following a tax expense of NGN1.11 billion (vs NGN2.07 billion in Q3-22), profit after tax printed NGN2.03 billion (Q3-22: NGN3.98 billion).
Comment: TOTAL’s Q3-23 result highlights the inadequacies in the downstream oil and gas sector and the weakness in the operating environment which have remained inhibiting factors to petroleum marketers. We anticipate the company to see out the year with resilient momentum, as we envisage higher demand from festive-induced activities. Nonetheless, we expect cost pressures to remain unabated over the rest of the year.
