Conoil Profit Squeeze, Revenue Downturn Raise Investors Concerns
Conoil Plc has released its unaudited financial statements for the half-year (H1) period ended 30 June 2025, and the results signal a challenging operating environment for the oil marketing giant. The company’s financial performance took a hit across several key indicators, especially its topline revenue and bottom-line profitability, painting a cautious picture for shareholders and prospective investors.
Conoil recorded a significant drop in revenue during the first six months of 2025. Total revenue fell by 20.4%, from N180.57 billion in H1 2024 to N143.65 billion in H1 2025. This decline reflects weaker product demand, potential pricing pressures in the downstream oil sector, and a reduced market share.
While revenue dropped sharply, cost of sales also decreased albeit at a slightly lower pace falling by 18.9% to N132.28 billion from N163.05 billion in the previous year. However, this did little to cushion the impact on margins.
The company’s gross profit fell from N17.53 billion to N11.36 billion, representing a 35.2% decline year-on-year. This sharp reduction indicates margin compression, which is attributed to less favourable product margins, rising operating costs.
While Conoil managed to keep administrative expenses largely stable rising marginally from N3.20 billion to N3.21 billion—distribution expenses jumped by 19.1%, from N1.88 billion to N2.24 billion. Rising distribution costs suggest increased transportation and logistics expenses, which is driven by inflation and supply chain inefficiencies.
Finance costs soared by more than 114%, increasing from N2.22 billion to N4.76 billion. This sharp rise reflects either increased interest rates alongside higher levels of debt servicing, adding more strain to the company’s financial performance.
The most concerning numbers come from Conoil’s profit figures as profit before tax (PBT) dropped significantly to N1.15 billion in H1 2025 from N10.22 billion in H1 2024, representing an 88.8% decline.
Profit after tax (PAT) fell even further to N900.42 million, down from N8.02 billion, marking an 89% plunge.
While the income tax expense reduced to N246.61 million (from N2.10 billion), it wasn’t enough to offset the dramatic decline in operating performance.
In line with lower net profits, Earnings Per Share (EPS) declined from 1.156 kobo to 130 kobo, showing an 88.8% year-on-year drop. This erosion in shareholder value is a red flag, especially for income-focused investors.
Net Asset Per Share also saw a modest decline, slipping from 5.93 kobo to 5.82 kobo, representing a 1.9% drop.
Despite the revenue and profit downturn, Conoil’s balance sheet shows mixed performance vis-a-vis inventories dropping sharply to N14.48 billion from N29.25 billion, which indicate better inventory management amid lower production volumes.
Trade and other receivables increased significantly to N89.01 billion (from N71.80 billion), raising concerns about working capital strain and receivables collection.
Cash and bank balances improved slightly to N7.85 billion, up from N7.26 billion, offering modest liquidity support.
Retained earnings increased from N35.32 billion to N36.22 billion, suggesting accumulated profits from earlier periods are still being preserved.
Total assets rose slightly to N117.56 billion from N114.95 billion, a sign of relative balance sheet stability.
One positive highlight was a notable reduction in borrowings to N21.46 billion, down from N28.68 billion in the previous year. However, trade and other payables increased to N50.26 billion from N40.57 billion, potentially indicating delays in settling supplier obligations in reliance on extended credit terms.
At a current market price of N234.50 per share, and with EPS now at 130 kobo, the stock trades at a very high Price-to-Earnings (P/E) ratio, suggesting it is overvalued relative to its earnings performance. The market seems to be pricing in a potential future recovery, but given the steep drop in profitability, this optimism might be premature without clear turnaround signals.
Conoil’s H1 2025 financials reveal a company under real strain. With revenue down, costs rising, and profits significantly weakened, investor sentiment cool in short term. While its balance sheet is not in distress, the income statement tells a different story one of operational and financial pressure.
Investor Recommendation: Considering the Q2 numbers, we recommend a “SELL” (Short-term) / “HOLD” (Long-term with turnaround potential) in view of fair value estimate between N130.00 – N150.00 in terms of high risk level at current market price of N234.50.
Conoil has a free float of amounting a value of
N168,34, representing 24.26% as at 30 June 2025, which is far above the industry required listed quoted companies on the Nigerian exchange, indicating that the company is well capitalised and liquid for future investment expansion. #Conoil Profit Squeeze, Revenue Downturn Raise Investors Concerns#
