Wednesday, October 31, 2018 / 05:40 PM / NSE
CLICK HERE TO VIEW MORE
Lean Margins Weigh On Earnings – Cardinal Stone Research
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.
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.
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%).
profitability margins and higher net finance costs (+9.0% QoQ, +179.2%
YoY) weighed on earnings as the firm made an after-loss of
million in Q3’18 (Q2’18 after-tax loss: N10 million).
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.
1. FO Share Price Drops by -16.67% in Four Days - Coincidence or News Led? – Sep 13, 2018
2. Tonye Cole Co-Founder Sahara Group, Steps Down From Board To Participate In Politics – Sep 03, 2018
3. Forte Oil Plc: Will Planned Divestment Unlock Value?
4. FO Declares N7.92bn PAT in Q2''18 Results; Revenue Grew by 32.4%,(SP:N25.05k)
5. Forte Oil Plc Announces the Outcome of Its 39th AGM Held On May 23, 2018
6. Shareholders Approve Forte Oil’s Divestment Plan From Subsidiaries
7. Forte Oil Plc - Decent Q1’18 Numbers, AGM To Decide On Plans to Divest Subsidiaries
8. Analysts Advise Caution Over Forte Oil’s Announced Plans To Divest
9. Forte Oil To Sell Some Nigerian Assets, Exit Ghana
10. Forte Oil Plc Obtains Exclusive Right to Distribute Chevron’s Havoline Motor Oils
11. FO Declares N2.96bn PAT in Q1 2018 Result,(SP:N37.45k)