Eterna Plc demonstrated a strong financial recovery for the fiscal year ended December 31, 2024, reversing significant losses recorded in the previous fiscal year. Revenue rose markedly by 71.11% year-over-year (YoY), increasing from NGN183.28bn in FY:2023 to NGN313.62bn in FY:2024. This robust growth was primarily driven by substantial increases in fuel and lubricant sales, reflecting favourable pricing and increased market penetration. 

Overall, while mindful of ongoing macroeconomic risks, the outlook for Eterna Plc remains  cautiously positive, anchored on the company’s improved operational discipline, proactive strategic adjustments, and ability to effectively adapt to evolving market conditions. Therefore, we place a BUY recommendation for Eterna.

The cost of sales grew significantly by 64.57%, increasing from NGN166.42bn in FY:2023 to NGN273.95bn in FY:2024, predominantly driven by higher procurement and operational expenses.

Despite rising costs, gross profit more than doubled, climbing by 135.27% from NGN16.86bn in FY:2023 to NGN39.67bn in FY:2024. Gross profit margin improved significantly from 9.20% in FY:2023 to 12.65% in FY:2024, highlighting enhanced pricing strategies and improved operational efficiencies.

Operating profit experienced substantial growth, surging by 286.76% YoY from NGN7.79bn to NGN30.16bn. This impressive increase reflects effective cost management and significantly reduced selling and distribution expenses, which declined YoY by 19.09%. Notably, the operating margin expanded considerably from 4.25% in FY:2023 to 9.61% in FY:2024.

Profit after tax (PAT) significantly improved from a loss of NGN9.43bn in FY:2023 to a profit of
NGN3.23bn in FY:2024. The turnaround in net profit resulted from effective operational restructuring, despite increased finance costs, impairment charges, and continued foreign exchange losses.

However, finance costs rose notably from NGN1.51bn in FY:2023 to NGN6.30bn in FY:2024 due to higher interest rates and elevated borrowing activities, which negatively impacted net profitability margins. Additionally, impairment charges increased significantly, reflecting higher credit risk management activities amid economic uncertainties.

The company’s balance sheet showcased steady improvement, with property, plant, and equipment rising to NGN15.03bn from NGN12.18bn, demonstrating ongoing investment in capital assets. Inventories decreased from NGN27.24bn in FY:2023 to NGN23.47bn in FY:2024, reflecting better inventory management practices. However, cash and cash equivalents declined from NGN6.90bn to NGN1.94bn, indicating reduced liquidity driven by significant repayments of borrowings and increased finance expenses.

Outlook

Looking forward, Eterna Plc is positioned to capitalize on its recent turnaround and operational restructuring, although several market factors will influence its future performance. Declining global fuel prices may positively impact volume sales, offsetting some margin pressures. 

However, competitive dynamics and fluctuating procurement costs remain significant concerns that the company must carefully manage.

To sustain profitability, Eterna Plc will need to continue enhancing operational efficiencies, strategically manage its inventory and supply chain, and rigorously control costs and expenses. Additionally, the management of credit risk and foreign exchange exposures will remain critical to maintaining profitability. 

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