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Total Nigeria Reports Q2 2017 Results as Cuts to consensus 2017E Estimates Expected

Proshare

Friday, July 28, 2017 5:57 PM / FBNQuest Research

Event: Total Nigeria (Total) reports Q2 2017 results

Implications
: Cuts to consensus 2017E estimates expected

Positives
: Q2 sales, PBT and PAT all declined, by -16% y/y, -66% y/y and -68% y/y respectively

Negatives
: No obvious positives

This afternoon, Total Nigeria (Total) reported Q2 2017 results which showed declines across all key P&L line items. While sales of N72.5bn declined -16% y/y, PBT and PAT of N3.1bn and N1.9bn both declined by slightly below 70% y/y.

These y/y declines are unsurprising given the strength of Total’s Q2 2016 performance, a period the firm, as well as other major marketers, benefitted from the FG’s fx preferential treatment. The topline decline was driven by a high single-digit y/y fall in sales to N55.7bn at service stations.

This along with a gross margin contraction of -623bp y/y more than offset positives coming through from a much improved other income line. Other income was buoyed by fx-related gains of N1.3bn. Sequentially, the trend was similar to the y/y ones, with declines across all key lines. While sales declined -10% q/q, both PBT and PAT were down -28% q/q.

Compared with our estimates, while sales beat by 6%, PBT was behind by around 7%. A positive surprise on the other income line was offset by a weaker-than-expected gross margin outcome. On an annualised basis, Total’s H1 2017 PAT is tracking behind consensus N10.5bn forecast. As such, we expect downward revisions to consensus 2017E estimates. Year to date, Total shares have declined -10%, underperforming the NSE ASI by 47%. We rate the stock Neutral.


Tota
l Nigeria Q2 2017 results: actual vs. FBNQuest Research estimates (N millions) 

Q2 2017

H1 2017

 

Actual

Y/y

Q/q

FBNQuest est.

Act. vs      FBNQuest est (%)

Actual

Y/y

FBNQuest est.

Act. vs      FBNQuest est (%)

 

Sales

72,510

-15.5%

-9.9%

68,622

5.7%

152,972

5.1%

149,084

2.6%

 

cost of sales

-65,183

-9.2%

-8.8%

-60,387

7.9%

-136,647

11.5%

-131,850

3.6%

 

Gross profit

7,326

-47.7%

-18.6%

8,235

-11.0%

16,326

-28.7%

17,234

-5.3%

 

-gross margin

10.1%

-623bps

-108bps

12.0%

-190bps

10.7%

-507bps

11.6%

-89bps

 

Operating expenses

-5,280

3.3%

1.1%

-5,147

2.6%

-10,502

1.97%

-10,370

1.3%

 

Other income

1,550

1162.6%

125.5%

395

292.4%

2,237

423.3%

1,082

106.7%

 

Operating profit

3,596

-60.2%

-19.4%

3,483

3.3%

8,060

-38.2%

7,946

1.4%

 

Net int. and similar chgs

-533

n/a

150.0%

-179

198.3%

-746

680%

-392

90.4%

 

PBT

3,063

-66.3%

-27.9%

3,304

-7.3%

7,314

-43.5%

7,554

-3.2%

 

-PBT margin

4.2%

-638bps

-106bps

4.8%

-59bps

4.8%

-411bps

5.1%

-29bps

 

Tax

-1,128

-62.2%

-28.5%

-1,057

6.7%

-2,707

-32.4%

-2,636

2.7%

 

Tax rate

36.8%

401bps

-32bps

32.0%

483bps

37.0%

607bps

34.9%

212bps

 

PAT

1,935

-68.3%

-27.6%

2,247

-13.9%

4,607

-48.4%

4,918

-6.3%

 

-PAT margin

2.7%

-445bps

-65bps

3.3%

-61bps

3.0%

-313bps

3.3%

-29bps

 

Other comprehensive income

0

n/a

n/a

0

n/a

0

n/a

0

n/a

 

Total comprehensive income

1,935

-68.3%

-27.6%

2,247

-13.9%

4,607

-48.4%

4,918

-6.3%

 

                       

Source: NSE, FBNQuest Research estimates

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3.     
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