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TOTALENERGIES MARKETING NIGERIA PLC Q1'24 Earnings Release - Bottom-line Soar on Improved Margins

Amidst sector’s deregulation, higher fuel prices drive revenue growth For the first quarter of the year, Total reported a stellar result, as turnover and profitability margins improved across board. Revenue came in 99% higher y/y to ₦269.8 billion, driven by broad-based improvements across all of its business lines. Turnover from its fuel business printed 108% higher y/y to ₦218.6 billion, on the back of higher product pricing. Similarly, revenue from its lubricants business saw a 69% y/y increase to ₦51.8 billion, driven by an uptick in prices.

Margins recover on improved sales, amid a less stringent pricing regime Just like we anticipated, Total’s Margins recovered y/y, and remained stable q/q, reversing the downward trend it had been dealing with, pre-deregulation. This is as price controls have been less stringent.  In light of this, we saw this trend stay put in Q1, with margins soaring 2ppts y/y to 13% (Q1’23: 11%), whilst remaining stable q/q. Given this higher margin, gross profit expanded 134% y/y to ₦35.1 billion.

Performance to surge, on improved pricing dynamics We envisage a brighter turnout for Total, as government price controls will likely continue to ease, allowing for more market-reflective pricing. This shift is expected to drive revenue growth, particularly with the company's extensive market reach. Also, margins are expected to expand y/y as we have seen pricing dynamics improve. Thus, with anticipated topline growth, profitability is expected to strengthen y/y. To put in numbers, we see revenue printing at ₦989.5 billion, up 56% y/y, while gross margin is projected to print at 14% (FY’23: 13%). This is expected to drive gross profit to ₦138.5 billion, up 69% y/y. After accounting for finance costs, our net income expectations for FY’24 year sits at ₦30.8 billion, up 138% y/y. In light of this performance, we see TOTAL’s EPS printing at ₦90.6/share (FY’23: ₦38.0), and DPS printing at ₦27.2/share (FY’23: ₦25.0).