Totalenergies Rebounds, Hits N20.6bn Profit at H1 

Totalenergies Marketing Nigeria Plc has steered a big turnaround that has established an all-time profit high of N20.6 billion at the end of half-year operations, beating the full-year group profit figure of N12.9 billion in 2023 and the previous profit high of N16.8 billion in 2021.

The company faced a downswing for the past two years during which its bottom line went down to N16.1 billion in 2022 and further down to N12.9 billion in 2023.

However, the company’s interim financial report for the half year ended June 2024 shows a big harvest in the making for the energy marketing company. It reversed the downswing and more than compensated for the lost ground for growth over the preceding two years.

The company’s upside functions came from both angles of revenue gains and cost savings. Sales growth has gained much speed so far in the year and pressure from operating costs that gulped revenue gains last year has eased considerably.

Totalenergies’ sales revenue has grown much accelerated, reaching almost N530 billion at half-year, an increase of 93 per cent year-on-year. This compares to an increase of less than 32 per cent to N636 billion for the 2023 full year.

Other income, which multiplied three and a half times to almost N7 billion, and finance income, which jumped by 172 per cent over the same period to N3.4 billion, reinforced the strong growth in sales.

A further boost came from a change in fortune from foreign exchange losses of N11.5 billion at the end of last year to a net gain of N4.2 billion at the half of this year. Foreign exchange loss was a key cost element that consumed more than all the gains in gross profit in 2023.

Cost saving was also extracted from administrative expenses, which grew by 68 per cent to almost N29 billion at the half year.

However, production costs grew slightly higher than sales at 94 per cent year-on-year to N465.5 billion at the end of the half-year operations and lost its cost-saving mood seen in the first quarter.

A mild encroachment of production costs depressed the gross margin to 12.1 in the review period. Gross profit still grew strongly at 84 per cent to N64.4 billion at half year, down however from 134 per cent advance in the first quarter.

Selling and distribution expenses still could not be tamed, which surged ahead by 239 per cent year-on-year to N7.4 billion at the end of the half-year trading.

However, the cost savings from administrative expenses were sufficient to dilute the high growth in selling and distribution costs. They permitted an overall slowdown in operating costs for Totalenergies at half-year.

The outcome is an outstanding increase of 126.4 per cent in operating profit to N35 billion at the end of June 2024, down from a 156.6 per cent leap in operating profit in the first quarter.

The half-year figure has beaten by far, the full-year figure of less than N24 billion at the end of 2023 when operating profit dropped by 13.6 per cent.

The result of accelerated revenue growth against an overall slowdown in costs is a gain in profit margin from 3.2 per cent to 3.9 per cent over the review period.

The critical success factor for the energy company is the ability to convert accelerated earnings into profit so far this year.

Rising finance costs reflect the company’s huge debt profile of N82.7 billion at the end of June 2024, a drop from over N103 billion in the first quarter.

Pre-tax profit rose by 126.8 per cent to N30.6 billion at the end of half year, an upswing from a drop of over 28 per cent to N17.6 billion at the end of the 2023 operations.

Totalenergies closed the half-year operations with an after-tax profit of N20.6 billion, an increase of 134 per cent from the closing profit of N8.8 billion in the same quarter in 2023.

The company earned N60 per share at half-year operations, a big upturn from N25.88 in the same period in 2023.