Conoil Plc is reaping the dividend of petroleum price deregulation with profit multiplying roughly three and half times to over N6 billion at the end of half-year trading.
Strong growth in sales with significantly improved margins is the strength of the company in the earnings field so far this year.
The half-year interim financial statement of the petroleum marketing company at the end of June 2023 shows accelerated growth in sales revenue in the second quarter – accounting for 60 per cent of the half-year turnover of N87 billion.
This is accompanied by a big gain in profit margin from 2 per cent in the same period last year to 7.2 per cent this year.
Increasing sales with a big boost in the ability to convert the same into profit is the bullish point for the company this year.
Cost of sales however gained much speed in the second quarter at an increase of 75 percent to roughly N46 billion, representing over 61 percent of the half-year figure of less than N75 billion.
The company’s management however balanced the incursion of input cost with cost savings from distribution and administrative expenses in the quarter.
It cut down distribution costs by 21.4 per cent to N468 million in the second quarter and kept administrative expenses flat at N1.3 billion.
The strict cost-income matching enabled the company to build a pre-tax profit of over N4 billion in the second quarter – about 53 per cent of the half-year figure of N7.8 billion.
The company’s half-year sales of over N87 billion represent an increase of about 55 per cent – a strong acceleration from an increase of 33.7 per cent in turnover in the first quarter.
Cost of sales grew at a slower pace than sales at 51 per cent to almost N75 billion, which raised gross profit margin from less than 12 per cent in the same period last year to 14 per cent in half a year in June 2023.
Gross profit therefore expanded by 83 per cent to over N12 billion, reflecting the slowdown in cost of sales and the resulting gain in margin.
Further strength came from an increase in other operating income from less than N62 million to over N94 million as well as cost savings from three other expense lines.
Distribution expenses ended flat at N1.1 billion and administrative costs went down slightly to close at N2.6 billion. Finance expenses grew by 22.6 per cent to N717.6 million, which still offered significant cost savings.
The company achieved all-around cost savings at the end of half-year operations, which powered an outstanding growth of 222.4 per cent in pre-tax profit to N7.8 billion.
After tax profit grew by 245 percent to N6.2 billion at half year.
The company earned N9.01 per share at the end of June 2023, up from N2.61 per share in the same period last year.
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