Conoil Plc delivered a solid performance in FY:2024, underpinned by significant revenue growth and improved profitability compared to FY:2023. Overall revenue increased by 60.50%, rising from NGN201.39bn in FY:2023 to NGN323.13bn in FY:2024.

This robust top-line performance was largely driven by strong demand in the company s core business segments, which include the marketing of refined petroleum products as well as the manufacturing and marketing of lubricants, household, and industrial chemicals.

In the fourth quarter, revenue grew from NGN50.74bn in Q4:2023 to NGN74.00bn in Q4:2024—a YoY increase of approximately 45.82%—underscoring strong performance in the later part of the year. Given the company’s strategic emphasis, it is reasonable to infer that the robust performance in refined petroleum products played a critical role in driving these numbers.

Cost and Profitability Analysis

Cost of sales escalated significantly from NGN181.56bn in FY:2023 to NGN294.72bn in FY:2024, marking an increase of 62.31%. Despite this steeper cost base, gross profit improved from NGN19.83bn in FY:2023 to NGN28.41bn in FY:2024, representing a YoY increase of 43.27%. The higher input costs did compress margins, yet the company successfully translated increased sales volumes into stronger absolute profitability. Operating expenses also experienced notable rises—distribution expenses increased by 80.66% (from NGN2.76bn to NGN4.99bn) and administrative expenses by 27.54% (from NGN4.49bn to NGN5.73bn). Finance costs nearly doubled, rising by 98.68% from NGN1.96bn in FY:2023 to NGN3.88bn in FY:2024. These pressures resulted in a 12.50% increase in profit before tax—from NGN12.28bn in FY:2023 to NGN13.81bn in FY:2024—and a 15.40% rise in profit for the year, from NGN9.87bn to NGN11.39bn. Basic earnings per share (in kobo) improved from 1,422 to 1,641, mirroring the overall profitability enhancement.

Balance Sheet and Cash Flow

The balance sheet exhibited considerable strengthening in FY:2024. Total assets grew by 16.50%, increasing from NGN97.48bn in FY:2023 to NGN113.57bn in FY:2024. Non-current assets expanded by 25.06% (from NGN3.87bn to NGN4.84bn), while current assets increased by 16.16% (from NGN93.61bn to NGN108.73bn). Shareholders’ funds surged by 27.07%, rising from NGN33.15bn to NGN42.11bn, which underscores improved financial resilience, even as total liabilities increased from NGN64.33bn to NGN71.46bn.

Cash flow performance underscored a significant turnaround. Conoil Plc generated a net cash inflow from operating activities of NGN8.35bn in FY:2024, reversing a net cash outflow of NGN16.46bn in FY:2023. This improvement reflects more efficient working capital management and better cash conversion from core operations. Outflows from investing activities increased to NGN1.81bn (from NGN0.71bn) as the company continued to reinvest in its asset base, while financing activities witnessed higher outflows of NGN6.31bn compared to NGN3.69bn in FY:2023, driven primarily by increased dividend payouts and higher finance costs.

Analytical Outlook

Looking ahead, whilst we expect continued positive performance, though certain challenges remain. The commencement of operations by the Dangote Refinery introduces new dynamics to the domestic Premium Motor Spirit (PMS) market. The Dangote Refinery has reduced the ex-depot price of petrol from NGN950 to NGN890 per litre, aiming to align with global energy sector trends and alleviate consumer costs. This development is expected to intensify competition in the PMS market, potentially impacting Conoil Plc’s market share and pricing strategies. However, the company’s established brand presence and extensive distribution network may provide a competitive edge in maintaining customer loyalty.

Additionally, declining global oil prices, influenced by increasing geopolitical tensions, could lead to lower domestic fuel prices. While this may reduce revenue per litre, it is anticipated to boost sales volumes as consumers benefit from more affordable fuel. This volume increase could offset the lower unit prices, potentially sustaining overall revenue levels. The decrease in energy costs could also contribute to lower cost margins as well and increased profitability. Therefore, we place a BUY recommendation on Conoil Plc.

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