Totalenergies’ Profit Drop To N12.9bn Again On Poor Q4


Totalenergies Marketing Nigeria Plc has reported a profit drop for the second year to N12.9 billion at the end of its 2023 operations – a steeper drop than in the preceding year.

The energy marketing company had forecast that a dismal earnings reading was to be expected in the final quarter even as the quarter saw after-tax profit fall from N3.6 billion to slightly over N2 billion.

That was however better than the forecast N1.6 billion profit for the closing quarter, which raised the actual profit above the N12.4 billion expected for the full year.

The company’s yet-to-be-audited financial report for the full year ended December 2023 shows that pressure from operating costs outweighed better-than-expected revenue gains in the final quarter leading to the profit drop in the period.

Except for an income tax credit of N1.1 billion – which accounts for more than one-half of the profit for the fourth quarter, the company experienced all-round cost increases that drained revenue and smashed margins.

The company’s final quarter sales revenue is much better than forecast at above N213 billion compared to less than N139 billion. In place of an expected drop of 4.5 percent in sales in the quarter, actual sales revenue grew by a surprising 46.9 percent.

Input cost rose at a slightly slower pace of 44.6 percent to N187.7 billion for the quarter, which enabled a healthy growth of 65.6 percent in gross profit to N25.7 billion.

Three major cost increases claimed more than all the increase in gross profit, including a net foreign exchange loss of over N5 billion in the final quarter and selling/distribution expenses that multiplied more than four times to N2.6 billion.

Also, administrative costs grew by almost 77 percent in the quarter to over N15 billion, accounting for 34.4 percent of the full-year figure.

The cost increases led to a drop of 43.4 percent in operating profit for the quarter to less than N4 billion.

There was strong growth of 86 per cent in finance income in the closing quarter to N1.5 billion but this was overshadowed by more than doubling of finance expenses at over 118 per cent to N4.5 billion.

Net finance costs rose by 138.7 per cent to almost N3 billion for the quarter, cutting pre-tax profit from N5.7 billion in the same quarter in 2022 to N993 million.

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A tax credit of N1.1 billion helped to build a bottom line of N2.1 billion for the quarter and prevent a steeper fall in after-tax profit.

Sales revenue for the 2023 full year grew by 31.8 per cent to roughly N636 billion, as better-than-expected sales in the final quarter raised the closing level well above the company’s forecast turnover figure of N561.4 billion for the year.

Input cost grew by a slightly lower margin than sales at 31.2 per cent to N554 billion, which enabled an increase of 36 per cent in gross profit to N81.8 billion for the year.

Net foreign exchange loss of N11.5 billion led to other operating cost increases that consumed more than all the gains in gross profit.

Selling and distribution expenses rose by 80 percent to N6.7 billion and administrative costs grew by 37.4 percent to N44.4 billion in the full year.

The cost increases encroached on operating profit – which went down by 13.6 percent to less than N24 billion at the end of the year.

Finance income recorded impressive growth of 68 percent to N3.8 billion but finance expenses grew more rapidly at 87.6 percent to over N10 billion, which led to the doubling of net finance costs to N6.3 billion.

The company’s borrowings grew from N47.7 billion in 2022 to N83.7 billion at the end of 2023.

Pre-tax profit fell by more than 28 percent to N17.6 billion but a drop of 44.4 percent in income tax expenses to N4.7 billion slowed down the decline in after-tax profit.

TotalEnergies closed 2023 operations with an after-tax profit of N12.9 billion, which is a drop of 19.7 percent from the closing profit of N16.1 billion in 2022.

This marks a profit drop for the second year from the company’s peak figure of roughly N17 billion in 2021. The profit margin went down from 3.3 percent in 2022 to 2 percent at the end of 2023.

The company closed the 2023 operations with earnings per share of N38.09, down from N47.47 per share in 2022.

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