MRS Oil Nigeria Plc delivered strong financial results for the full year ended December 31, 2024. Revenue grew by 71.26% year-over-year (YoY), rising from NGN182.31bn in FY:2023 to NGN312.23bn in FY:2024. This robust performance primarily reflects the ongoing positive effects from the petroleum pricing deregulation implemented by the Nigerian government in May 2023, which significantly elevated fuel prices and consequently boosted revenues in 2024.

Notably, sales of petrol (PMS) alone contributed NGN272.5bn, up from NGN161.7bn in the prior year, a reflection of both price inflation and sustained demand for the company s core fuel product. Other product lines like aviation fuel (ATK), diesel (AGO), lubricants, and LPG also saw robust increases in revenue in 2024, indicating broad-based growth. Consequently, gross profit jumped to NGN23.90bn in 2024, from NGN15.00bn in 2023. 

Despite impressive top-line growth, cost of sales increased substantially by 72.33% YoY, from NGN167.31bn to NGN288.33bn, driven largely by increased product procurement costs. Gross profit grew by 59.30%, from NGN15.00bn in FY:2023 to NGN23.90bn in FY:2024. Gross margin for the year stood around 7.7% of revenue, a bit thinner than the 8.2% margin of 2023, reflecting intense competition and the partial pass-through of higher costs to customers. Overall, the strong revenue expansion far outweighed the higher costs, yielding a much-improved gross profit year-on-year.

Operating profit saw significant growth, increasing by 61.98% YoY from NGN6bn to NGN9.72bn. Yet, the operating margin slightly narrowed from 3.29% to 3.09%, reflecting increased administrative expenses, which rose significantly due to higher management fees, fuel expenses, and operational overheads. In addition, the company took a significant impairment charge in 2024 (NGN2.07bn vs just NGN0.19bn in 2023) on financial assets, indicating a more conservative stance on receivables (perhaps recognizing difficulties some customers had in the high-price environment). Despite these higher costs, several positive factors boosted operating and net profits. Other income almost tripled to NGN646.8mn, thanks in part to income from storage services and other sundry gains. Moreover, net foreign exchange losses were sharply lower in 2024 (NGN1.29bn) compared to the prior year’s NGN3.22bn, as the foreign exchange market stabilized relative to the severe devaluation losses incurred in 2023. The combination of robust gross profit and these favorable shifts enabled the strong rise in operating profit.

Net profit after tax (PAT) increased impressively by 60.80%, climbing from NGN4.05bn in FY:2023 to NGN6.51bn in FY:2024. Despite this growth, net profit margin slightly decreased from 2.22% in FY:2023 to 2.09% in FY:2024, influenced by increased finance charges and elevated impairment costs on financial assets.

OUTLOOK

We anticipate a more stable operating environment in 2025 as the downstream industry adjusts fully to the deregulated regime. The recent commencement of local refining (notably the Dangote refinery’s operations and the Port Harcourt refinery’s rehabilitation) is a positive development that is expected to ensure ample domestic supply of refined products. We expect this improved supply situation to persist, which should reduce the pressure of import costs and logistics, and potentially ease cost of sales (for instance, freight expenses may decline with more local sourcing).

At the same time, however, fuel demand may recover only gradually, Nigerian consumers and independent marketers are still adjusting to higher fuel prices. We are cautiously optimistic that volumes will begin to pick up once the market normalizes, as economic activities adapt to the new pricing. Therefore, we place a BUY recommendation for MRS. 

Please click here to download full report.