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Total’s EPS growth driven mainly by solid revenue growth (+46.3% y/y)

TOTAL published its Q1-22 unaudited results yesterday (28 April), reporting EPS of NGN12.86 (Q1-21: NGN8.75), translating to a growth of 47.0% y/y. The EPS growth was driven mainly by solid revenue growth (+46.3% y/y) and moderation in net finance cost (-44.6% y/y).
Revenue grew by 46.3% y/y to NGN97.61 billion in Q1-22, reflecting TOTAL’s sustained dominance in the downstream oil & gas market. The outturn was driven by the impressive growth across TOTAL’s Lubricants & others (91.3% y/y) and Petroleum products (34.1% y/y) lines. Notably, revenue contribution from the Lubricants & others line increased to c. 31.0% (Q1-21: 24.0%)- its highest level on record – highlighting management’s strategy of maximizing its lubes sales. Across its business segments, revenue from the Network (+10.8% y/y; 53.0% of revenue), General Trade (+125.6% y/y; 37.0% of revenue) and Aviation (+168.3% y/y; 11.0% of revenue) segments all increased.
On a q/q basis, revenue declined marginally by 0.4% q/q, following marginal declines in the Network (-1.4% q/q) and General Trade (-1.4% q/q) segments, both of which masked the 8.5% q/q growth in the Aviation segment.
Gross margin (-238bps) compressed to 14.8% in Q1-22 (Q1-21: 17.2%) as cost of sales (+50.6% y/y) surged relative to the expansion in revenue (+46.3% y/y). We attribute the spike in cost of sales to the uptick in crude oil prices (Average Brent price: USD97.86/bbl in Q1-22 vs USD61.32/bbl in Q1-21).
Consequently, EBITDA (-60bps) and EBIT (-6bps) margins declined to 8.7% and 6.8%, respectively, further dragged by an 11.3% y/y increase in operating expenses.
Net finance cost declined by 44.6% y/y to NGN77.64 million (Q1-21: NGN140.08 million), following a surge in finance income to NGN684.00 million (Q1-21: NGN37.05 million). On the other hand, finance costs increased by 330.0% y/y to NGN761.65 million, driven by interests on other loans (Q1-22: NGN515.32 million | Q1-21: Nil).
Overall, PBT surged by 50.6% to NGN6.55 billion in Q1-22 (Q1-21: NGN4.35 billion). Notwithstanding a higher tax expense of NGN2.19 billion (vs NGN1.38 billion in Q1-21), PAT grew by 47.0% y/y to NGN4.37 billion (Q1-21: NGN2.97 billion).

In all, TOTAL’s Q1-22 result is impressive, as the company maintained positive earnings amid a plethora of challenges in the business environment.