Background
Total Nigeria plc, formerly known as Total Fina Elf Nigeria plc, is the entity that emerged following the successful merger between Total Nigeria plc and Elf Oil Nigeria Ltd on September 11, 2001.
Total Nigeria with RC 1396 was incorporated as a private company on June 1, 1956 to market petroleum products in Nigeria. It became Total Nigeria Limited in 1967, and Total Nigeria plc in 1978, after it went public in accordance with the Nigerian Enterprises Promotion Decree (1977) with N10 million.
The company has 339.52 shares outstanding with shareholders fund of N13.24 billion, as of December 2013.
Financial results for 2013
Total Nigeria, a company in the downstream oil and gas industry, released its full year results which showed growth at both top- and bottom-line level. It’s an impressive performance considering the early 2013 delay in subsidy payments that curbed the companies in this sector’s growth.
For the year ended December 2013, Total’s gross revenue grew by 9 percent to N238.16 billion from N217.84 billion same period of the prior year (FY12).
Profit before tax (PBT) spiked by 14 percent to N8.12 billion in 2013FY compared with N7.09 billion as of 2013FY.
Profit after tax in the review period followed the same growth status quo as it also surged by 14 percent to N5.33 billion from N4.67 billion as of 2012FY. The spike in Total’s top- and bottom-line performance can be ascribed to the 139 percent gain in other income.
However, the company was unable to translate this impressive performance to reducing cost as cost of sales margin remained flat at 87.5 percent. Because the company is producing at a relatively higher cost, gross margin remained flat at 12.05 percent in the review period, while operating margin stood at 4.24 percent.
Net margin was also affected by cost pressures as it remained low and flat at 2.24 percent. This means that the company has not been able to efficiently produce each unit of product at lower price.
Operating expenses for the year ended December 2013, slid by 13 percent to N21.05 billion as against N18.56 billion as of FY12.
Shareholders wealth has been maximised and their resources meticulously used as return on average equity (ROaE) was 43.47 percent in FY13, while return on average assets (ROaA) stood at 6.86 percent same period. Total assets for the year ended December 2013, grew by 4.4 percent to N79.4 billion in FY13 from N76.06 billion, as of 2012FY.
In conclusion, Total’s operations, just like others in the industry, might take a hit from the import licence issuance delay that led to the nationwide fuel scarcity experience in Q1 2014.
Share performance and outlook
The share price of the company has increased by 21.2 percent in the past year to close at N161.2 per share on April 30, 2014, on the floor of the Nigerian Stock Exchange, and market capitalisation was N54.73 billion on the same day.
The company currently trade at price-to-book ratio and price-to-sales ratio of 4.84xs and 0.23xs. The firm is rewarding owners of the company as it proposes a dividend of N9, representing a pay-out of 60 percent.
BALA AUGIE
