Higher Prices: TotalEnergies Grows Profit by 176% in Q1
TotalEnergies Market Nigeria Plc grew its bottom line strongly in the first three months of operations in the financial year 2024, according to details from its unaudited report for the period.
According to details from its Q1 result, the company’s pretax profit rose by 162.2% to N16.84 billion from N6.42 billion in the comparable period in the year 2023. Despite its higher tax expenses, TotalEnergies’ net profit grew by 176.2% year on year to N11.50 billion versus N4.16 billion reported in Q1-2023.
TotalEnergies revenue grew by 99.5% year on year in Q1-2024 on account of higher price post subsidies removal in June 2023. This advantage supported revenue across its business segments to grow markedly in the first quarter of the year.
The strong performance was underpinned majorly by the surge in petrol prices, up by 160.4% year on year following the deregulation of the downstream oil and gas sector in 2023, Cordros Capital Limited said in its review note.
Analysts also noted about 50% increase in diesel prices and a 16% surge in kerosene prices supported the outturn. Every quarter, the company revenue grew by 26.5%.
The company’s gross margin increased to 13.0% in Q1-2024 from 11.1% in Q1-2023 reflecting the expansion in revenue even as cost pressures remained intact. Precisely, the cost of sales grew by 95.2%, reflecting the impact of FX devaluation and the highly inflationary environment.
Specifically, the numbers show increases in net changes in inventory of lubes, greases and refined products (+96.3% y/y), customs duties (+96.4% y/y) and transportation costs (+47.2% y/y).
Consequently, its earnings before interest tax depreciation and amortisation (EBITDA) and operating margins increased to 7.7% and 6.9%, respectively. At the same time, operating expenses surged 107.0% amidst inflationary pressures in the economy.
TotalEnergies net finance cost increased by 115.2% year on year, following a surge in finance cost, which jumped by 119.3% year on year in the period.
The higher finance cost results from additional interest costs of N1.83 billion on the overdraft obtained in the quarter. The company’s finance income increased by 124.1%.
Analysts at Cordros Capital Limited said TotalEnergies Q1-24 numbers came in as expected, with the sector still reeling from the impact of petrol subsidy removal on prices.
Unsurprisingly, cost pressures remained a sticking point, with most of the pressure stemming from currency devaluation, according to its review note.
“For the rest of the year, while we expect the impact of the sector deregulation to wear off in Q2, we still expect TOTAL to remain resilient, benefitting from its wide reach in the market even as cost pressures remain unabated”, Cordros Capital said. Naira Suffers Big, CBN Goes Ballistic Against FX Whales
