Total Plc.’s Share Price Jumps 10% after Earnings Beat
Total Plc.

Total Plc.’s Share Price Jumps 10% After Earnings Beat

Total Nigeria Plc.’s share price jumped 10% Thursday after the company’s earnings rebound from loss position amidst the ongoing rally in the global oil market.

In its unaudited report released on the Nigerian Exchange, Total’s earnings per share saw a meteoric increase, rising to N15.01 from N1.10 loss per share in the second quarter of 2020.

Reacting to the impressive outing, the share price which has remained flattish jumped 10% to N184.4 from N168 as investors’ position for the dividend.

The company’s board announced it would pay shareholders whose names appear on the company’s register of members by August 13 interim dividend payout of N1.358 billion translating to N4 per share.

The company’s revenue for the period returned to the pre-pandemic level, jumped by as much as 132.1% year on year in Q2-2021. In absolute number, the company sales printed at N84.637 billion from N36.463 billion in the comparable period last year.

The solid outturn in impressive sales record was driven by the solid growth across the business’ three key segments: Network, General Trade and Aviation.

It unaudited report shows that revenue from the Network segment increased 43.1% and is a major driver of the company’s topline accounting for 71.0% of revenue.

Sales from General Trade saw a massive uptrend, surged 305.0% while the segment accounts for 24.0% of the company’s revenue. Aviation which accounts for 5% of the total revenue of the company witnessed a significant jump, rising by 893.2% year on year. 

“We attribute the increase across the business lines to an increase in demand given that the economy has effectively reopened and TOTAL’s ability to substantially push out volumes given its vast storage and distribution channels”, Cordros Capital said in a note.

Total’s unaudited result also showed that across the product lines, Petroleum products and Lubricants and other lines grew by 138.5% and 114.9% year on year respectively.

The breakdown shows that petroleum products contribution to total revenue increased to 74.9% in 2Q of 2021 from 72.8% in the comparable period in 2020. Meanwhile, Lubricants and others decreased to 25.1% as against 27.2% that was on record in 2Q-2020. 

On a quarterly basis, Cordros analysts the company scorecard show that revenue increased by 26.9%, with all business segments – General Trade (+121.4%) and Aviation (+178.2%) – save for the Network segment (-18.5%), recording sturdy growth.

Amidst the oil rebound, the company’s gross margin which increased 382 basis points came in higher as it expanded to 16.6% from 12.7% in 2Q-2020.

Cordros Capital attributed the higher margin outturn to faster growth in revenue which came in at 132.1% relative to 122% year on year jump in the cost of sales.

Analysts highlight that the increased cost of sales was influenced by the rally in crude oil prices -average Brent price closed at US$69.08 a barrel litre in Q2-2021 from US$33.3 in 2Q-2020.

“though we do not have management’s confirmation as of writing, we believe that the derivative contracts TOTAL entered with its trading partners in the latter part of 2020 to hedge price risk may have expired”, Cordros Capital noted.

Owing to the growth in gross margin, earnings before interest tax, depreciation and amortisation (EBITDA) and earnings before interest and tax (EBIT) margins printed 11.5% and 9.5% compare with -0.1% and -4.5% in 2Q-2020 respectively.

On the financing side, the company also witnessed some sort of pressure from its financial strategy implementation. Total Plc.’s net finance costs printed N607.32 million in 2Q-2021, miles away from net finance income of N1.26 billion in 2Q-2020.

The outturn was driven mainly by a 97.2% year on year decline in finance income, according to Cordros analysts. As of half year 2021, the company’s total debt increased slightly by 2.0% to N33.26 billion from N32.61 billion in the financial year 2020.

Overall, the company’s pretax profit settled at N7.43 billion in 2Q-2021 from a loss before tax of N386.90 million in 2Q-2020 on account of macroeconomic improvement post-lockdown.

Adjusting for a tax expense of N2.33 billion, the company’s recorded an after-tax profit of N5.10 billion, coming from N373.97 million loss after tax position recorded in 2Q-2020.

Commenting on the earnings, Cordros Capital said, “TOTAL’s 2Q-2021 performance was in line with our expectations, as the topline surmounted last year’s low and returned to pre-pandemic levels.

“Just as we envisaged in our Q1-2021 first glance report, given the rally in crude oil prices, costs have risen astronomically, and we think they will remain at their current level at least until 2022”.

The market reacted positively to the result, as TOTAL’s share price closed limit up as of the market close. Year to date, the ticker is up +48.5%, compared to the Oil & Gas index (+39.1%), and the broader All-Share index (-4.2%).

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Total Plc.’s Share Price Jumps 10% After Earnings Beat