Total Nigeria Records Relatively Weak YoY Trend Across Key P and L Lines in Q1 2018 Results


Friday, April 27, 2018 /10:59 AM / FBNQuest Research 

Event: Total Nigeria reports Q1 2018 results
Implications: Neutral to slightly negative reaction by the market likely
Positives: Q1 sales and PBT both up 13% q/q and 24% q/q respectively
Negatives: Relatively weak y/y trend across key P&L lines 

Late yesterday, Total Nigeria (Total) published Q1 2018 results which showed that sales were down -6% y/y to N75.6bn while PBT also declined by -38.2% y/y to N2.6bn. A 188% y/y rise in net finance charges were primary responsible for the more significant PBT decline.

To a lesser extent, a 9% y/y rise in opex and 10% decline in other income did not help. The higher net interest expense line broadly reflects a 33% y/y rise in debt levels. Total posted an income of N920m accruing from gains on sales of PPE. However, the y/y trend on the other income line was hampered by an fx-related loss of N583m compared with an fx gain of N371m in Q1 2017. PAT declined -38% y/y to N1.7bn.

Overall, the y/y trend is unsurprising given that Total’s (and downstream majors) preferential fx treatment lasted till Q1 2017; as such, product volumes and profit margins were unusually high, relatively, in the prior year. On a sequential basis, both sales and PBT were up 13% q/q and 24% q/q respectively. However, PAT declined -19% q/q.

Compared with our estimates, both sales and PBT were broadly in line with. Positives coming through from the opex line were offset by negative surprises on the other income and net finance expense lines. On an annualised basis, Q1 PBT is tracking behind of consensus’ N8.7bn estimate. Therefore, we expect downward adjustments to consensus estimates. We however expect a neutral-to-slightly negative reaction by the market because of base effects making the y/y trend appear weaker that it would have normally.

Total shares have shed -3.2% ytd compared with the ASI’s +6.6% gain.

We rate the stock Neutral. Our estimates are under review. 

Total Nigeria Q1 2018 results vs. FBNQuest Capital Research estimates (N millions)
Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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