Scores of half-year results released by downstream oil players indicate that the industry still remains mired by declining revenues, as profitability remains muted, according to data available to businessamlive.
Half-year results by Total, Mobil, Oando and Conoil Plc indicate declines in profit, while Forte Oil, though with a marginal increase in profit year-on-year had lower profits attributable to shareholders in the review period.
Year-to-date gains in the share prices of most of the companies, excepting Oando are also looking south, lagging behind overall gains by the Nigerian Stock Exchange (NSE). Specifically, Forte’s share price is down 28.5 percent, Conoil (2.88%), Mobil (16.85%) and Total (12.54). Oando shares are however up 69 percent year to date.
This makes the case for a review of earnings expectations by investors in the companies who as at last year reaped bountifully from their high performance, an analyst said.
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Un-audited half-year results for Total Plc show profit before tax dropping massively from N12.9 billion in 2016 to N7.9 billion in 2017. The performance according to the company is due largely to a huge rise in finance cost.
Finance costs are reported to have risen from N278 million in 2016 to N1 billion in 2017, while earnings per share fell from N18 in 2016 to N5.70 in 2017.
Mobil (now 11 Plc) also had a decline in profit before tax from N6.5 billion to N3.6 billion, due to exceptional items relating to a change in its pension scheme. To this end, its earnings per share fell from N12.2 in 2016 to N6.86 in 2017.
For Conoil Plc’s, revenue dropped massively from N1.5 billion in 2016 to N627 million in 2017 on account of the absence of subsidy refunds, which occurred in H1 2016. Therefore, earnings per share fell from N1.50 in 2016 to 0.62 kobo in 2017.
Oando Plc made a loss of N839 million against a loss before tax of N17 billion in 2016, with earnings per share at negative 31 kobo, while Forte Oil saw an increase in profit before tax from N4.2 billion in 2016 to N4.9 billion in 2017.
Profits attributable to shareholders of the company, however, dropped from N2.4 billion in 2016 to N1.4 billion in 2017. Earnings per share equally dropped from N1.88 in 2016 to N1.05 in 2017.
Market watchers are of the opinion that the second half of the year may be better although the likelihood of an increase in pump prices appears remote. They point out that the challenges faced by some of the firms may not linger for long as the domestic economy is gradually turning around for good.
The outlook is also looking favourable as some of the companies are seeking alternative ways of increasing revenues. For example, Forte Oil has indicated plans to start the sale of its solar energy solutions in a few months and expects to make revenue by the fourth quarter of 2017.