April 29, 2024/Cordros Report

TotalEnergies Marketing Nigeria Plc (TOTAL) published its Q1-24 unaudited results earlier today, reporting EPS of NGN33.87 (Q1-23: NGN12.26), translating to a growth of 176.2% y/y. The EPS growth was driven mainly by substantial revenue growth (+99.5% y/y) during the period, supported mainly by higher product pricing.

Revenue grew by 99.5% y/y in Q1-24 as revenue across its business segments grew markedly – Network (+119.8% y/y | 54.0% of revenue), General Trade (+79.0% y/y | 35.0% of revenue) and Aviation (+82.9% y/y | 11.0% of revenue). The strong performance was underpinned majorly by the surge in petrol price (+160.4% y/y) following the deregulation of the downstream oil and gas sector in 2023. Also, we note that higher diesel (+49.7% y/y) and kerosene (+16.0% y/y) prices supported the outturn. On a q/q basis, revenue grew by 26.5%.

Gross margin (+192bps) increased to 13.0% in Q1-24 (Q1-23: 11.1%), reflecting the expansion in revenue even as cost pressures remained intact. Precisely, cost of sales grew by 95.2% y/y, reflecting the impact of FX devaluation and the highly inflationary environment. Specifically, the numbers show increases in net changes in inventory of lubes, greases and refined products (+96.3% y/y), customs duties (+96.4% y/y) and transportation costs (+47.2% y/y).
 
Consequently, EBITDA (+99bps) and EBIT (+154bps) margins increased to 7.7% and 6.9%, respectively, amid a 107.0% y/y increase in operating expenses.

Net finance cost increased by 115.2% y/y, following a surge in finance cost (+119.3% y/y). The higher finance cost results from additional interest costs (NGN1.83 billion) on the overdraft (NGN44.68 billion | Q1-23: Nil) obtained in the quarter. On the other hand, finance income increased by 124.1% y/y.

Overall, PBT surged by 162.2% to NGN16.84 billion in Q1-24 (Q1-23: NGN6.42 billion). Notwithstanding a higher tax expense of NGN5.34 billion (vs NGN2.26 billion in Q1-23), PAT grew by 176.2% y/y to NGN11.50 billion (Q1-23: NGN4.16 billion).

Comment: TOTAL’s Q1-24 numbers came in as expected, with the sector still reeling from the impact of petrol subsidy removal on prices. Unsurprisingly, cost pressures remained a sticking point, with most of the pressure stemming from currency devaluation. For the rest of the year, while we expect the impact of the sector deregulation to wear off in Q2, we still expect TOTAL to remain resilient, benefitting from its wide reach in the market even as cost pressures remain unabated.