FO Declares N9.13bn PAT in Q3'18 Results; Revenue Grew by 39.4%,(SP:N21.60k)


Wednesday, October 31,  2018 / 05:40 PM / NSE

Proshare Nigeria Pvt. Ltd.



Lean Margins Weigh On Earnings – Cardinal Stone Research


Revenue increased by 39.0% YoY to N94.8 billion. Likewise, after-tax profit improved to N79 million compared to a loss after tax of N626 million in 9M’17. However, on quarterly basis, the firm made an after-tax loss of N24 million in Q3’18.



  • FO’s Q3’18 revenue grew by 54.7% YoY to N33.0 billion, largely supported by the rise fuels sales (+58.7% YoY), which accounted for about 89.6% of total revenue. The YoY growth in turnover was also supported by higher lubricants sales (+25.1% YoY) during the quarter. However, on a quarter-on-quarter basis, revenue slid 1.4%. We attribute the QoQ drop in turnover to lower supply of premium motor spirit (PMS) by the Nigerian National Petroleum Corporation (NNPC) during the quarter.
  • Like its peers, FO recorded a lower gross margin of 8.4% in Q3’18 (Q2’18: 9.5%), pressured by higher landing costs. In the same vein, operating margin declined to 2.4% (Q2’18: 2.8%).
  • Lean profitability margins and higher net finance costs (+9.0% QoQ, +179.2% YoY) weighed on earnings as the firm made an after-loss of N24 million in Q3’18 (Q2’18 after-tax loss: N10 million).


Analyst Take:

Margins deteriorated in Q3’18 (Q3’18: 91.2%, Q2’18: 89.4%) impacted by lower PMS sales and higher landing costs.


With US sanctions on Iran set to take effect in November, we envisage further cost pressure on margins in Q4’18. Nonetheless, we believe that FO’s ability to effectively manage its operating expenses will be key to supporting bottom line.


We will revisit our numbers after getting further clarity from management on the result. Our target price on the counter is currently under review.


 Proshare Nigeria Pvt. Ltd. 


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