The after-tax profit of Rakunity Petroleum Plc, the least-capitalized firm in the Nigerian oil & gas sector, was not significantly battered by huge decline in receipts from Premium Motor Spirit (PMS) and Dual Purpose Kerosene (DPK), thanks to reduced direct costs and operational expenses.
The oil firm’s post-tax profit contracted some 200 basis points in 2018 to N29.6 billion, despite earnings from PMS and DPK plunged 44 percent and 52 percent respectively in the review period.
Rakunity’s top line pared at a single-digit rate of 7 percent to N9.6 billion amid dip in receipts from three of its four product lines, owing to an appreciation in earnings from core product, Automotive Gas Oil (AGO).
AGO, which accounted for more than 75 percent of Rakunity’s 2018 top-line, grew 14 percent to N7.3 billion, an uptick from N6.4 billion reported in the previous margin.
The oil firm explained that a significant portion of its revenue is sold through a related company, Asharami Synergy Plc.
The company also has an agreement with So Energy which has by a court sanction moved to Asharimi Synergy Plc, to wherein Asharmi procures products and sells to customers with 5 percent commissions on margin made on sales.
Going by key metrics, the oil firm posted slim improvement in profitability. Gross margin was up some 0.21 percent points to 4.04 percent in 2018, compared with 3.83 percent a year before.
Likewise, operating margin rose 0.05 percent points to 0.47 percent. Net profit margin grew 0.04 percent points to 0.32 percent in 2018 compared with 0.29 percent last year.
This means that the oil firm kept N40 as profit from every thousand naira earned as revenue before settling indirect expense, retained N4.7 after meeting variable costs, and further kept N3.2 after settling interest and tax.
A further look at its financials revealed that the oil firm bettered profitability minimally as a result of 8 percent contraction recorded in cost of sales to N9.2 billion, and 3 percent dip in operational expenses.
Total assets appreciated slightly more than half to N2 billion in 2018, an uptick from N1.3 billion in 2017, buoyed by 50 percent rise in current assets to N1.8 billion.
Total liabilities doubled to N1.4 billion on surge in trade payables, while shareholders’ fund grew some 419 basis points to N597 million.
The firm did not declare dividend in 2018, making it the third time in six years of not paying dividends to shareholders.
Rakunity Plc is basically into the sales and distribution of petroleum products, and has 56.62 million shares outstanding, in which 85 percent is owned by major investor, Toparte Nigerian Limited.
ISRAEL ODUBOLA
