Going by AnalystÃƒÆ’Ã†â€™Ãƒâ€šÃ‚Â¢ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¡Ãƒâ€šÃ‚Â¬ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¾Ãƒâ€šÃ‚Â¢s projection, Conoil Nigeria Plc may record a decline of 17.7 per cent in profit in the financial year ending December 31, 2005.
Asset and Resource Management (ARM) in its March report estimated that the company would record a profit after tax (PAT) of N1.95billion in the financial year ended December 31, 2005 compared with N2.37billion recorded in the corresponding period of 2004.
Shareholders of the company are however not likely to be affected by the expected below par performance as dividend proposed was estimated to be N1.62billion, representing increase of 16.5 per cent over N1.39billion shared among shareholders of the company for the period ended December 31, 2004.
This is consistent with the culture of the company to always deliver good return to its shareholders at the end of its business year.
The projected decline in profit was however attributed to the expected increase in cost of sale by the company in the period ended December 31, 2005. Cost of sale in 2005 at N65.94billion will be the highest in five years. It would represent 32.3 per cent increase over N49.85billion incurred in the financial year ended December 31, 2004.
The expected jump in cost of sale will cut the estimated turnover of N78.04billion for the year to gross profit of N12.09billion. gross profit was N10.18billion in 2004.
Increasing pressure in the oil market has impacted negatively on the ability of local companies to convert earnings to profit as margins trended downwards.
For Conoil, an estimated margin of 2.5per cent for 2005 is 2.28 percentage points lower than its four year average of 4.78 per cent.
Other petroleum marketers also face the same plight of margin decline. Texaco is also expected to drop from its four year average of 2.78 per cent to 2.18 per cent in the same period among others.