Hike in PMS prices, others jerk up petroleum marketing companies revenue by 47%

On the heels of increasing prices of Premium Motor Spirit (PMS) and other related products, a total of four listed Petroleum marketing companies on the Nigerian Exchange Limited (NGX) generated an increase of 47 per cent in revenue in 2021.

These four companies, according to correspondence 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 2021 unaudited result and accounts for full year ended December 31, 2021 as against N423.8 billion reported in prior full year result.

A breakdown revealed that MRS Oil Nigeria reported the highest revenue followed by Totalenergies Marketing Nigeria.

While MRS Oil Nigeria’s revenue grew by 71.44 per cent to N71.98billion in 2021 from N71.45billion generated in 2020, Totalenergies Marketing Nigeria generated N341.2billion revenue, an increase of about 67 per cent from N204.72billion reported in 2020.

In addition, Eterna Plc reported N82.6billion in revenue in 2020, an increase of 39 per cent from N59.3 billion reported in 2020, while Conoil generated N126.7 billion as revenue in 2021 from N117.47 billion reported in 2020.

Further investigations revealed that these companies revenue growth was driven by sales in PMS also known as petrol and Automotive Gas Oil (AGO) popularly called diesel and lubricants and greases.

For instance, Totalenergies Marketing Nigeria grew its petroleum products revenue by 62.4 per cent to N255.04 billion in 2021 from N157.05 billion in 2020, while its lubricants & others revenue rose significantly by 81 per cent to N86.13 billion in 2021 from N47.7 billion in 2020.

Revenue from PMS reported by MRS Nigeria rose by 90.06 per cent to N60.2billion in 2021 from N3.67billion in 2020.

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With the further steady increase in global oil prices, the federal government through Petroleum Products Pricing Regulatory Agency (PPPRA) in March 2021 released a pricing template that indicated the guiding prices.

`The template, which showed that petrol pump price was expected to range from N209.61 to N212.61 per litre, was greeted with widespread public outcry.

It was based on an average oil price of $62.22 per barrel, and the landing cost of petrol was put at N189.61 per litre.
According to the Organization of the Petroleum Exporting Countries (OPEC), the price of crude oil moved 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 0.04per cent on year-on-year basis to N165.77 in December 2021 when compared to N165.70 valued in December 2020.

The bureau also revealed that the average price for refilling a 5kg cylinder of liquefied petroleum gas (Cooking Gas) on year-on-year analysis increased from N1949.75 in December 2020 to N3,594.81 in December 2021 showing an increase of 84.37 per cent.

According to NBS report: “The average retail price of Automotive Gas Oil (Diesel) paid by consumers increased by 28.97per cent on a year-on-year basis from a lower cost of N224.37 per litre recorded in the corresponding month of last year to a higher cost of N289.37 per litre in December 2021.”

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Despite the growth in revenue, Eterna reported N851.62 million loss in 2021 from N605.5million loss reported in 2020.

Conoil and Totalenergies Marketing Nigeria benefitted from the hike in revenue as profit declared in 2021 rose by 111.1 per cent and 711 per cent respectively.

Meanwhile, analysts have attributed the growth in petroleum marketing companies revenue to an increase in petroleum price.

“The crude oil price per barrel in the global commodity market was low in 2020 and it affected the price of petrol. The federal government was reliant to increase the price of petrol at some time. Investors also compensated these companies considering their stock price appreciating in 2021, said analyst at PAC Holdings, Mr. Wole Adeyeye.

He added, “In 2020, business activities were poor and there was movement restriction that people were not travelling. In 2021, we saw the ease of movement, improved activities in the transport, and commercial and manufacturing sectors.

“The growth recorded in revenue by these companies has a lot to do with improvement in business activities than the hike in price of petroleum products.”

Also, Capital market analyst, Mr. Rotimi Fakayejo attributed the increase in revenue of these companies to higher-margin in crude oil products, stressing that the ease of movement also contributed to revenue and profit.

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

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In his words, “Total Nigeria is one of the most reliable Oil & gas stock on NGX and the company by year-end is going to have EPS of N35.00. The company’s payout is always 70 to 80 per cent every year and they may still pay a dividend of N20.00 at the end of 2021 financial year. It makes a lot of sense for investors to buy Total Nigeria and Seplat Petroleum shares on NGX.”

The listed petroleum marketing companies sector on the NGX had emerged as the best performing index on the NGX amid impressive profit and revenue driven by a hike in prices of PMS, among others.

The index gained 52.52 per cent to close 2021 at 345.01 basis points from 226.20basis points it closed in 2020.

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

The stock price of Totalenergies Marketing Nigeria gained 71 per cent to close 2021 at N221.9 from N130.00, while Oando gained 19.5 per cent from N3.70 it closed in 2020 to N4.42.

In addition, Conoil gained 5.52 per cent in stock price to close at N22 from N20.85 it opened for trading.


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