Friday, April 28, 2017/6:55 PM/ FBNQuest Research
Event: Mobil Oil Nigeria reports Q1 2017 results
Implications: Downward revisions to consensus 2017 estimates expected
Positives: Q1 sales up 11% y/y to N25.2bn
Negatives: PBT declined -15% y/y to N2.3bn; PAT of N13m declined -99% y/y due to actuarial losses of c.N2.0bn
This morning, Mobil Oil Nigeria (Mobil) reported Q1 2017 results which showed that while sales grew 11% y/y to N25.2bn, PBT and PAT both declined y/y. While PBT fell -15% y/y to N2.3bn PAT declined more significantly to N13m.
Following the recent acquisition of a majority stake in Mobil by NIPCO a significant portion of the firm’s Defined Benefit Scheme was migrated to a Defined Contribution Scheme leading to an actuarial loss of c.N2.0bn.
A gross margin contraction of -480bps y/y to 12% more than offset any benefits coming through from a double-digit topline growth, 13% rise in other income and flattish opex, leading to the PBT decline of -15% y/y. Rental income from investment properties was up 12% y/y to N1.4bn. Sequentially, while sales were up 13% q/q PBT declined by -36% q/q. PAT was down significantly as a result of the actuarial loss stated above.
Compared with our estimates, while sales beat our N21.6bn forecast by 17%, PBT came in behind by 10% due to a negative surprises on the gross margin line. PAT came in significantly behind mainly due to the N2.0bn actuarial loss.
On an annualised basis, Mobil’s PAT of N13m tracks well behind consensus earnings estimate of N7.9bn. As such we expect downward revisions to consensus 2017E estimates on the back of these numbers.
Excluding the actuarial loss, Mobil’s performance is more commendable. We however expect management to provide more colour on this exceptional line item. At current levels, on our published estimates, Mobil shares are trading on a 2017E P/E multiple of 16.7x for an EPS growth of 8.2% in 2018E. Year to date, Mobil shares have gained +21.9%, outperforming the NSE ASI by 26%. We rate the stock Underperform.
Our estimates are under review.
Mobil Oil Nigeria Q1 2017 results: actual vs. FBNQuest Research estimates (N millions)