For the third quarter ending September 30, 2024, Total Energies Marketing Nigeria Plc recorded a pre-tax profit of N11.279 billion, exceeding its Q3 pre-tax expectation of N6.270 billion and representing a 258.62% year-over-year increase.
As a result, the company’s pre-tax profit for the first nine months of 2024 was N41.850 billion, more than twice its overall pre-tax profit for 2023.
The company’s Q3 2024 financial results also show that sales increased by 78.39% yearly to N263.963 billion, primarily due to petroleum product revenue.
Key Highlights (Q3 2024 vs Q3 2023)
- Revenue: N263.963 billion, up 78.39% YoY
- Cost of Sales: N234.680 billion, up 84.95% YoY
- Gross Profit: N29.283 billion, up 38.88% YoY
- Selling & Distribution Expenses: N4.063 billion, up 128.17% YoY
- Administrative Expenses: N16.383 billion, up 45.90% YoY
- Operating Profit: N17.885 billion, up 297.74% YoY
- Net Finance Cost: N6.606 billion, up 388.78% YoY
- Profit After Tax: N6.854 billion, up 237.07% YoY
- Earnings Per Share: N20.19, up 237.06% YoY
- Cash and Cash Equivalents: N99.607 billion, up 12.99%
- Total Assets: N530.914 billion, up 41.53%
- Total Equity: N75.012 billion, up 33.76%
Analysis
In the third quarter of 2024, Total Energy exceeded expectations in all major areas, including revenue, gross profit, operating profit, pre-tax profit, and post-tax profit.
The firm has forecasted a pre-tax profit of N8.62 billion for Q4 2024. Given the pre-tax profits made in the first three quarters, this forecast seems ambitious, but Total has a track record of exceeding expectations, so it might surpass this goal.
This might result in increased dividends and alluring returns for shareholders, boosting investor confidence and sentiment and possibly raising the share price.
However, growing overhead and sales expenditures are still compressed profit margins. The gross profit margin decreased from 14.25% in Q3 2023 to 11.09% in Q3 2024.
Furthermore, the net profit margin of 2.60% and pre-tax profit margin of 4.27% are both below historical levels and might be regarded as typically low. As a result of this margin compression, a lower percentage of revenue is kept as profit, which could affect Total’s profitability, financial stability, and return on equity.
A smaller profit margin can be hazardous, especially in the oil and gas industry, where revenue is mostly derived from a single source.
Because of this concentration, Total may be more susceptible to market swings that immediately affect profitability, such as alterations in regulations and commodity prices. Sustained success for Total will depend on efficient cost control.
Investors value Total’s continuous dividend payments and increasing profitability trajectory, even in the face of cost constraints.
Total’s earnings per share and dividends per share have grown at a compound annual growth rate (CAGR) of 54% and 39% over the last five years.
Earnings per share for the first nine months of 2024 more than doubled the full-year EPS of 2023, rising 142.41% year over year to N98.37.
With a net profit of N12.913 billion in 2023, the firm distributed a dividend of N25 per share, or N8.488 billion. Given that EPS is now 112% of 2023 levels, Total is quite likely to maintain or raise its dividend payment in 2024.
The stock’s share price has increased 75% year-to-date, up sharply from a 1.01% increase in the first half of 2024. It currently offers one of the highest dividend yields in the oil and gas industry, at 3.71%.
Together with solid financial results, this comparatively high dividend yield is likely to boost investor confidence and possibly result in additional share price growth.
