Economy
Total Nigeria: Whistle Blowing on Solid First Quarter
By ARM Securities
In keeping with the rave in town, we beam our equity strategy searchlight on a leading Oil Marketing Company (OMC), Total Nigeria Plc. (Total), which is scheduled to report 1st quarter earnings in the last week of April.
Despite its striking FY 16 earnings, which was almost four-fold higher YoY with EPS at N43.58, Total’s share price has declined 9.7% YTD (post result release: – 3.7%)—underperforming the broader NSEASI.
In our view, the weak appetite for the stock was underpinned by the company’s disappointing final dividend announcement of only N7.00 which brought total DPS to N17.00, with the implied pay-out ratio of 39% well behind its average of 84% over the last decade.
That said, the stock is typically prone to big moves after earnings releases and can easily gap up if the numbers are as strong as expected.
For full-year ended 2016, revenue grew 39.9% YoY to N290.9billion, largely reflecting a 38% YoY increase in petrol sales. The jump in PMS turnover reflects higher prices (+42% YoY to an average of N123/litre) which neutered volume weakness. Elsewhere, sales of lubricants climbed 53% YoY as the company raised lubes prices even as NGN depreciation at the parallel market pulled back importation of lubes to create scope for market share expansion for domestic players.
Consequently, gross profit was 94% higher relative to prior year with corresponding margin jumping to a decade high of 16.9% (+4.7pps YoY).
The foregoing combined with efficient cost control (OPEX: +1.3% YoY) to drive a four-fold YoY expansion in earnings.
Total reported its highest gross margin on record of 24.2% (+12.2pps QoQ) in Q4 16 in line with those of its close rival (Forte Oil Plc).
In our view, the upsurge reflects price increases in lubes and deregulated product segments (LPG, AGO, DPK) which more than offset weaker petrol sales.
Irrespective, N9 billion in other expenses mainly due to N7.4billion in foreign exchange loss1 moderated the impact of its record gross margin to leave EPS at N9.32 (+17.3% QoQ and +147.9% YoY). Barring the impact of the FX loss, Q4 16 EPS would have printed at N36.00 (FY 16: +489.4% YoY to N70.26).
For Q1 17, we expect petrol volumes to head further south owing to higher prices and supply constraints.
Specifically, we forecast a 10% QoQ decline in petrol volumes to 373million litres. That said, as with Q4 16, higher prices across petrol (67% YoY to N145/litre), diesel (60% YoY to N234.5/litre), kerosene (40% YoY to N311.56/litre), and lubricants (+18% average) as well as resilient volumes in these segments (excluding petrol) guide our Q1 17E sales of N75.7billion (+27% YoY, +7% QoQ).
Consequently, our gross margin expectation for the quarter is 20.2% (+5.3pps YoY, -3.9pps QoQ).
Further down, the flat movement in the interbank market (N305/$) and appreciation at the parallel market (+20% to N390/$2), compared to prior quarter, should dispel foreign exchange losses in the period.
To be clear, we now see scope for FX gains on the Trade creditors line—pegged to the parallel market.
This possibility notwithstanding, we take the cautious approach of discounting potential currency induced gains. Irrespective, we expect strong underlying performance over Q1 17, with an EPS estimate of N17.04 (83% QoQ and 104% YoY) leaving prospect for an interim dividend payment.
Over FY 17, despite expected higher average petrol pump price of N145/litre (2016 average: N123/litre) as well hike in lubes prices, weaker petrol volumes should moderate total sales growth to 8.5% YoY (to N315.6billion).
On cost, notwithstanding recent NGN appreciation at the parallel market which should ordinarily moderate input cost, our average crude oil price (22% YoY to $55/bbl.) and NGN forecasts (18% to N360/$) should leave COGS at elevated levels.
Consequently, gross margin should come in 20bps lower YoY at 16.7%. Furtherdown, amidst the still elevated payables, second order impact of weaker naira underpins our expectation for FX loss of N6.4bilion over 2017.
The foregoing should combine with higher net finance charges (+24% YoY to N717million), reflecting absence of payment of accrued interest on delayed subsidy, to drive our FY 17 EPS to N39.8 (-9% YoY) with total dividend at N19.88 (50% pay-out).
Total has had a good run over the last one year and currently trades at a P/E of 6.2x relative to 12.9x for peers. Net adjustments to our models drive our FVE 8% higher to N384.72, which implies a 43% upside from last closing price. We retain a BUY rating on the stock.
Source: www.armsecurities.com.ng.
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By Modupe Gbadeyanka
A targeted fiscal incentive designed to unlock the long-awaited Final Investment Decision (FID) on the Bonga Southwest Aparo (BSWA) deepwater project has been approved by President Bola Tinubu.
The approval followed months of intensive technical and commercial negotiations involving the Nigerian National Petroleum Company (NNPC) Limited as the concessionaire, the Nigeria Revenue Service (NRS), the Special Adviser to the President on Energy, Olu Verheijen, and the chief executive of Shell, Mr Wael Sawan.
In a statement signed on Tuesday by the Chief Corporate Communications Officer of NNPC, Mr Andy Odeh, it was disclosed that the project is estimated to attract about $20 billion in Foreign Direct Investment and position Nigeria for a new era of deepwater production.
It was said that it has the potential to attract strategic investments and accelerate sustainable economic growth, adding that it signals renewed confidence in Nigeria’s policy direction and its resolve to translate reform momentum into tangible investment outcomes.
The chief executive of NNPC, Mr Bashir Bayo Ojulari, said, “This approval is a testament to the President’s leadership, NNPC’s disciplined execution and our ability to structure complex, bankable transactions that deliver value for Nigeria.
“For nearly two decades, the Bonga Southwest project remained stalled. Today, under President Tinubu’s reform-driven leadership and through NNPC’s sustained advocacy, we have broken that logjam. This is what partnership, persistence, and policy clarity can achieve.”
“This milestone further affirms NNPC’s commitment, under the President’s leadership, to unlocking Nigeria’s vast energy potential through partnerships, disciplined innovation and execution excellence,” he further stated.
The Bonga Southwest project will be the first FID on a Nigeria deepwater Production Sharing Contract asset since 2008, re-establishing Nigeria as a premier deepwater investment destination.
The fiscal package approved by President Tinubu includes an enhanced Production Tax Credit and resolution of the 2021 dispute settlement agreement, creating a competitive framework that balances national value with investor returns.
The Bonga Southwest Aparo project, operated by Shell with all IOCs in Nigeria as partners, will create over 5,000 direct and indirect jobs, and deliver 150,000 barrels per day of crude oil and 140 million standard cubic feet per day of gas upon completion.
NNPC Limited, as concessionaire, worked closely with SNEPCo and the broader contractor party to develop alternative fiscal solutions that address structural constraints while protecting Nigeria’s long-term interests.
By Adedapo Adesanya
Nigeria recorded a trade surplus of N5.17 trillion in the first quarter of 2025, according to the National Bureau of Statistics (NBS) in its latest Foreign Trade in Goods Statistics report.
This affirmed that the country’s exports rose faster than imports for yet another quarter.
The report showed that the country’s total merchandise trade stood at N36.02 trillion in the period under review, higher than the N33.93 trillion recorded in the corresponding period of 2024 by 6.19 per cent, but lower than the N36.60 trillion achieved in the previous quarter by 1.58 per cent.
Total exports were valued at N20.60 trillion, accounting for 57.18 per cent of total trade. This represents a 7.42 per cent increase from ₦19.18 trillion recorded in the first quarter of 2024 and 2.92 per cent higher than the N20.01 trillion posted in the fourth quarter of 2024.
Meanwhile, imports came in at N15.43 trillion during the period, 4.59 per cent more than the N14.75 trillion recorded in the corresponding quarter of 2024, but 7.02 per cent lower than the N16.59 trillion of the preceding quarter.
The NBS report showed that Nigeria’s export trade continued to be dominated by crude oil, which was valued at N12.96 trillion and accounted for about 62.89 per cent of total exports, while non-crude oil exports were valued at N7.64 trillion, representing 37.11 per cent of total exports, and non-oil products contributed N3.17 trillion or 15.38 per cent of the export value.
The NBS noted that India, the Netherlands, the United States, France and Spain were Nigeria’s major export partners during the quarter.
On the import side, China remained Nigeria’s largest trading partner, followed by India, the United States, the Netherlands and the United Arab Emirates.
Major commodities exported during the period included crude oil, liquefied natural gas, petroleum gases, urea and cocoa beans, while key imports included gas oil, motor spirit, crude petroleum oils, cane sugar for refining and durum wheat.
The stats office added that the country’s positive trade balance rose by more than 50 per cent compared with the previous quarter, reflecting a stronger export performance
By Adedapo Adesanya
President Bola Tinubu on Tuesday asked the Senate to screen and confirm Mr Taiwo Oyedele as the Minister of State for Finance, to replace Mrs Doris Uzoka-Anite.
The President made the request through a letter read on the floor of the Senate by the Senate President, Mr Godswill Akpabio, after a three-week recess for the budget defence exercise.
The request was subsequently referred to the Committee of the Whole for further legislative consideration.
President Tinubu also sought the confirmation of Mr Magnus Abe as Chairman of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), alongside two commissioner nominees.
The Senate President also read another letter from the President seeking confirmation of Mr Mainasara Illo as Chief Executive Officer (CEO) of the Nigeria Anti-Doping Centre. The nomination was referred to the Senate committees on Narcotics and Drugs and Sports for joint screening.
Another letter from Mr Tinubu sought confirmation of Mr Francis Ifeanyi Asogwa as a commissioner representing the South-East in a federal commission. The nomination was referred to the Senate Committee on Judiciary, Human Rights, and Legal Matters for screening.
The Senate also received requests from the President to confirm two nominees as commissioners of the Revenue Mobilisation Allocation and Fiscal Commission: Mrs Amina Gamawa from Bauchi State and Mr Abdullahi Murktar from Kaduna State.
All nominations have been referred to the relevant committees for further legislative action and screening.
The nomination of the former fiscal policy partner and Africa tax leader at PriceWaterhouseCoopers (PwC) as minister was announced in a statement by presidential spokesperson, Mr Bayo Onanuga, last week.
Mrs Uzoka-Anite will now move to the Ministry of Budget and National Planning, as the Minister of State, her third portfolio in the administration, the presidential spokesman added.
The 50-year-old is a public policy expert, an accountant, and an economist.
He attended Yaba College of Technology and bagged a Higher National Diploma (HND) in accountancy and finance.
Mr Oyedele also earned a BSc in applied accounting from Oxford Brookes University.
The Senate also received the 2026 statutory budget of the Federal Capital Territory Administration (FCTA) from President Tinubu for consideration and approval.
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