Conoil sets new high on impressive earnings

Conoil-Station-23Conoil Plc recorded the highest gain at the stock market yesterday as increased demand for the equities of the downstream oil company pushed its market price to a new high of N51.48 per cent.

Conoil’s share price rose by 10.24 per cent with the addition of N4.78 to close at N51.48. The upswing yesterday increased Conoil’s year-to-date return in the past 10 months and seven days to 151.12 per cent, significantly above the stock market’s average year-to-date return of 35.78 per cent.

The gain, Conoil’s biggest advance in recent years, highlighted investors’ response to the third quarter corporate earnings report of the petroleum-marketing company. Conoil had shown the strongest improvement in profitability in the petroleum-marketing subsector.

Nine-month report of Conoil for the period ended September 30, 2013 showed that pre and post tax profits rose by 341 per cent and 329 per cent respectively. While sales growth was modest at 6.0 per cent, the company had leveraged on increasingly efficient cost management and financing structure. Turnover rose to N121.80 billion in 2013 as against N114.77 billion in comparable period of 2012.

Profit before tax jumped from N699.42 million to N3.08 billion while profit after tax leapt to N2.09 billion as against N487.22 million recorded in corresponding period of 2012. With these, earnings per share stood at N3.01 by September 2013 as against 70 kobo by September 2012.

There is a strong expectation that Conoil will consolidate its performance during the fourth quarter. According to the directors of the oil-marketing company, full year profit could rise to about N4 billion by the end of this year. On the basis of this management guidance, earnings per share could rise to N5.76 by the year ended December 31, 2013.

Market analysts yesterday said investors were taking positions in the oil stock on the back of the improved earnings and the commitment by the chairman of the company, Mr. Mike Adenuga (Jnr) that the company would deliver increased returns to shareholders.

Management Conoil has said they expected to drive performance with projected 65 per cent revenue increase from its nationwide retail outlets, especially newly commissioned mega stations. Performance is also expected to be augmented by additional income streams from new lubricant products launched earlier in the year as well as expected 72 per cent increase in probable revenue from the fully-deregulated lubricant business. With its new production plant in Port Harcourt, Conoil plans to step up engine oil exports to West African markets as well as enter into joint venture partnerships with leading car manufacturing companies for the use of Conoil lubricants in their vehicle engines.  It also expects additional incomes from ancillary services including marketing of Low Pour Fuel Oil (LPFO) and Bitumen, which were reactivated in the first half of 2013 and are expected to boost sales in the second half.

However, notwithstanding the preponderance of gainers to losers at 31 to 23, the depreciation in the share price of Dangote Cement moderated the overall market position yesterday. Aggregate market value of all equities inched up to N12.182 trillion from its opening value of N12,181 trillion. The All Share Index (ASI), which serves as benchmark for the equities market, inched up from 38,125.18 points to 38,125.91 points.

Dangote Cement, stock market’s most capitalised stock, lost 1.31 per cent or N2.49 to close at N187.51 per share.

Turnover at the stock market was above average with exchange of 511.20 million shares worth N5.65 billion in 5,128 deals.


Information from The Nation was used in this report.



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