PMS price hike, other 47% increases in oil marketing company revenue

Kayode Tokede

On the heels of rising prices of Premium Motor Spirit (PMS) and other related products, a total of four oil marketing companies listed on the Nigerian Exchange Limited (NGX) generated a 47% increase in their income in 2021.

These four companies, according to THISDAY’s investigations, are Conoil Plc, Eterna Plc, Juli Plc, Totalenergies Marketing Nigeria Plc and MRS Oil Nigeria Plc.

The companies reported a total of N622.79 billion in the 2021 unaudited results and accounts for the full fiscal year ended December 31, 2021, compared to N423.8 billion in the prior year’s results.

A breakdown revealed that MRS Oil Nigeria recorded the highest turnover, followed by Totalenergies Marketing Nigeria.

While MRS Oil Nigeria revenue grew by 71.44% to N71.98 billion in 2021 from N71.45 billion generated in 2020, Totalenergies Marketing Nigeria generated revenue of N341.2 billion , an increase of around 67% from the N204.72 billion reported in 2020.

Additionally, Eterna Plc reported revenue of N82.6 billion in 2020, an increase of 39% from the N59.3 billion reported in 2020, while Conoil generated N126.7 billion. naira of revenue in 2021 compared to 117.47 billion naira reported in 2020.

Further investigations revealed that revenue growth for these companies was driven by sales of PMS also known as automotive gasoline and diesel (AGO) commonly referred to as diesel and lubricants and greases.

For example, Totalenergies Marketing Nigeria increased its revenue from petroleum products by 62.4% to 255.04 billion naira in 2021 from 157.05 billion naira in 2020, while its revenue from lubricants and others increased significantly by 81% to reach N86.13 billion in 2021 from N47.7 billion in 2020.

PMS revenue reported by MRS Nigeria increased by 90.06% to N60.2 billion in 2021 from N3.67 billion in 2020.

With the continued steady increase in world oil prices, the Federal Government, through the Petroleum Products Prices Regulatory Agency (PPPRA), released in March 2021 a pricing model indicating indicative prices .

“The model, which showed the price at the petrol pump to vary from N209.61 to N212.61 per litre, was met with widespread public outcry.

It was based on an average oil price of $62.22 per barrel and the landing cost of gasoline was set at N189.61 per litre.
According to the Organization of the Petroleum Exporting Countries (OPEC), the price of crude oil has risen from $67.12 in 2020 to $77.97 per barrel in 2021.

The National Bureau of Statistics (NBS) revealed that the average price paid by consumers for PMS increased by 0.04% on an annual basis to reach N165.77 in December 2021 from the N165.70 assessed in December 2020.

The bureau also revealed that the average price of refilling a 5kg cylinder of liquefied petroleum gas (cooking gas) on a year-on-year analysis fell from N1949.75 in December 2020 to N3,594.81 in December 2021, an increase of 84.37%. .

According to the NBS report: “The average retail price of automotive gas oil (diesel) paid by consumers increased by 28.97% year-on-year, compared to a lower cost of N224.37 per year. liter registered in the corresponding month of the last year at a higher cost of N289.37 per liter in December 2021.”

Despite the revenue growth, Eterna recorded a loss of N851.62 million in 2021 compared to a loss of N605.5 million recorded in 2020.

Conoil and Totalenergies Marketing Nigeria benefited from higher revenues, with reported profits in 2021 rising by 111.1% and 711% respectively.

Meanwhile, analysts attributed the revenue growth of oil marketing companies to an increase in the price of oil.

“The price of crude oil per barrel in the global commodity market was low in 2020 and this affected the price of gasoline. The federal government was dependent on raising the price of gasoline at some point. Investors have also compensated these companies given their share price appreciation in 2021, said PAC Holdings analyst Mr. Wole Adeyeye.

He added: “In 2020 business activity was poor and there were movement restrictions preventing people from travelling. In 2021, we have seen the ease of movement, the improvement of activities in the transport, trade and manufacturing sectors.

“The revenue growth recorded by these companies has a lot to do with improving business operations than with rising prices for petroleum products.”

Furthermore, the capital market analyst, Mr. Rotimi Fakayejo, attributed the increase in revenue of these companies to a higher margin on crude oil products, pointing out that ease of circulation also contributed to revenue and profits.

According to him, “These companies reported an increase in revenue due to the higher margin of products sold this year. The movement restriction eroded their revenue last year, but with the ease of the COVID-19 lockdown, they were able to increase their revenue which translates into profits.
He argued that investors can always consider buying Total Nigeria shares on its intrinsic fundamentals on the NGX.

In its own words, “Total Nigeria is one of the most trusted oil and gas stocks on NGX and the company by the end of the year will have an EPS of N35.00. The company payout is still 70-80% every year and it can still pay a dividend of N20.00 at the end of the 2021 financial year. It makes perfect sense for investors to buy Total Nigeria and Seplat Petroleum shares on NGX.

The NGX-listed oil marketing companies sector had emerged as the NGX’s best-performing index amid impressive earnings and revenue driven by a rise in PMS prices, among other things.

The index gained 52.52% to close 2021 at 345.01 basis points from 226.20 basis points in 2020.

The three drivers of the index, Totalenergies Marketing Nigeria and Conoil, appreciated.

Totalenergies Marketing Nigeria’s share price gained 71% to close 2021 at 221.9 Naira from 130.00 Naira, while Oando gained 19.5% from the 3.70 Naira it closed in 2020 at N4.42.

Additionally, Conoil gained 5.52% in share price to close at N22 from N20.85 when it opened for trading.

Sallie R. Loera