MRS Oil Nigeria Plc announced a pre-tax profit of N3.076 billion for the first quarter ended March 31, 2024, up 58.34% year on year (YoY).
 MRS Oil recorded an outstanding N79.160 billion in sales in its 2024 Q1 financial statements, a 157.11% rise over the N30.788 billion reported in the previous year.
With 88.7% of total revenue, Premium Motor Spirits (PMS) is still the company’s main source of income.
Notable differences between Q1 2024 and Q1 2023
- Revenue: N79.160 billion +157.11% YoY
- Cost of sales: N73.548 billion +172.63% YoY
- Gross profit: N5.612 billion +47.23% YoY
- Impairment loss on financial assets: N208 million +0.99% YoY
- Admin expenses: N1.937 billion +62.58% YoY
- Net Foreign exchange gain: N495 million +215.47% YoY
- Operating profit: N3.012 billion +53.26% YoY
- Finance cost: N32.754 million -15.88% YoY
- Profit after tax: N1.990 billion +34.93% YoY
- Earnings per share: N5.88 +34.88% YoY
Premium Motor Spirit (PMS) revenue, which accounts for 88.7% of total sales and had an increase of 184% year over year, remains the primary source of revenue.
It’s important to note, nevertheless, that even with the significant increase in PMS revenue, its expense growth (207 YoY) exceeded that of its revenue growth.
This implies that even as revenue grew, PMS production and acquisition expenses soared even faster.
The gross profit margin significantly decreased as a result of this discrepancy between cost and sales growth, falling from 12.38% in Q1 2023 to 7.09%. This suggests that despite an increase in income, rising costs resulted in a decline in the profitability of each PMS unit sold.
The total costs were further increased by net foreign exchange losses and rising administrative overhead.
That means that if expenses keep rising faster than sales, eventually profitability can turn negative.
There has already been a drop in profitability as evidenced by the net profit margin, which dropped from 4.79% in Q1 2023 to 2.51% in Q1 2024.
That said, MRS Oil does well when compared to other companies. Crucially, the company’s stock has outperformed its earnings and shown strong momentum. Its year-to-date performance in 2023 was an amazing 645%, and so far this year it has increased by 28.6%, placing it as the 23rd best-performing stock on the NGX.
