TotalEnergies Marketing Nigeria Plc reported an impressive financial performance for the fiscal year ended December 31, 2024. Revenue grew significantly by 63.82% year-over-year (YoY), rising from NGN635.95bn in FY:2023 to NGN1.04tn in FY:2024. This robust growth was driven primarily by substantial increases across all operating segments, notably retail service station sales (Network) and corporate client sales (General Trade), benefiting from higher fuel prices.

Cost of sales for the year increased considerably by 67.13%, from NGN554.13bn in FY:2023 to NGN926.15bn in FY:2024. Despite the significant rise in costs, gross profit grew by 41.47%, from NGN81.82bn in FY:2023 to NGN115.75bn in FY:2024. However, the gross profit margin experienced a slight contraction from 12.87% in FY:2023 to 11.11% in FY:2024, driven primarily by higher procurement and operational costs.

Operating profit surged substantially, increasing by 158.66% YoY from NGN23.97bn to NGN62.02bn.

This considerable growth reflects effective management of operational expenses and a notable increase in other income, particularly from network income, including revenues from convenience stores and rental fees.

Net profit after tax (PAT) grew notably by 115.49%, from NGN12.91bn in FY:2023 to NGN27.82bn in FY:2024. Net profit margin improved significantly from 2.03% in FY:2023 to 2.67% in FY:2024, highlighting improved efficiency in cost management despite the high-interest rate environment impacting finance costs.

TotalEnergies Marketing’s balance sheet remained robust with significant asset growth. Property, plant, and equipment rose to NGN61.73bn from NGN43.13bn, reflecting ongoing investments in physical assets. Inventories increased notably from NGN73.91bn to NGN152.02bn, supporting higher sales activities. The company maintained strong liquidity, closing the year with cash and equivalents at NGN91.31bn, slightly up from NGN88.16bn in the previous year.

However, finance costs increased notably from NGN10.20bn to NGN26.02bn, mainly due to rising interest payments on bank overdrafts and import loans, reflecting increased borrowing activities for product importation amid foreign exchange fluctuations.

OUTLOOK

Looking ahead, we believe the company is strategically positioned, although recent developments in global and domestic fuel markets suggest potential challenges. Global oil prices are currently declining, prompting reductions in domestic fuel prices. While lower fuel prices could potentially compress profit margins, TotalEnergies may also benefit from increased sales volumes driven by improved affordability and consumer demand. However, competitive pricing adjustments by Dangote Refinery and NNPC could still intensify market competition, impacting market share and margins. The net effect on TotalEnergies’ financial performance will depend on its ability to effectively leverage higher sales volumes against narrower margins.

Consequently, to sustain profitability amidst declining fuel prices and increased competition, TotalEnergies will likely need to enhance operational efficiencies, explore diversification of its product offerings, and identify alternative revenue streams. Ongoing attention to cost management, inventory optimization, and strategic resource allocation will remain critical in navigating the anticipated economic pressures.

Overall, while acknowledging short-term pricing pressures, we maintain a cautiously positive outlook for TotalEnergies Marketing Nigeria Plc, anchored on its operational resilience, effective strategic management, and adaptive capability to evolving market conditions. Consequently, we place a BUY recommendation on TOTAL.

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