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Thursday, September 28, 2023

Conoil Entices Investors With Record Profits that Validates Impressive Market Performance

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Conoil Nigeria Plc, a petroleum marketing company involved in the sale of regulated gasoline and kerosene, diesel, aviation fuel and low pour fuel, has posted record profit that enticed investors and authenticated its impressive stock performances.

As evidenced so far in 2023, Conoil has leveraged its scale in making up for the pandemic-induced slump in earnings in 2020. And an excellently solid distribution network gives it the leeway and robust earnings makes it a top pick in the downstream oil and gas sector.

For the first three months through March 2o23, Conoil’s net income surged by 1,079 percent to N3 billion from N557.22 million the previous year.

Gross profit followed the same growth trajectory as it spiked by 111.26 percent to N6 billion from N2.84 billion as at March 2022.

Sales were up 33.74 percent to N34.96  billion in the period under review from N26.14 billion the previous year.

Analysts are of the view that the reopening of the economy magnified demand which has been bolstering earnings of major or dominant players in the downstream oil and gas sector.

Of course, they also benefited from price increases that were brought on by the rise in crude price at the international market due to the Russia and Ukraine war as the product has not been deregulated.

A breakdown of total sales shows it generated N33.62 billion from White products and N1.34 billion from Lubricants.

The white products segment is involved in the sale of Premium Motor Spirit (PMS), Aviation Turbine Kerosene (ATK), Dual Purpose Kerosene (DPK), Low-pour Fuel Oil (LPFO) and Automotive Gasoline/grease Oil (AGO).

The products under the lubricants segment are Lubricants transport, Lubricants industrial, Greases, Process Oil and Bitumen. Products traded under the LPG segment are Liquefied Petroleum Gas – Bulk, Liquefied Petroleum Gas – Packed, cylinders and valves.

The average retail price paid by consumers for Premium Motor Spirit (Petrol) for December 2022 was N206. 19 per litre, indicating a 24.38per cent increase when compared to the value recorded in December 2021 (N165. 77), while the average retail price of Automotive Gas Oil (Diesel) paid by consumers in December 2022 was N817.86 per litre, an increase of 182.64per cent from N289.37 per litre recorded in the corresponding month of the previous year.

Despite the pass-through impact of the rise in crude oil prices on costs of production and inflationary pressures due to structural inefficiencies and currency, Conoil recorded expansion in profit that beat economists’ estimates.

Gross profit margin increased to 17.18 percent in March 2023 from 10.87 percent the previous year. ‘

Net profit margin rose to 8.61 percent in the period under review from 2.13 percent the previous year.

The company’s shares have gained 80.90 percent so far this year, which outperforms the NGXASI index of 3.36 percent.

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