THUR 22 JULY, 2021-theGBJournal- TOTAL published its Q2-21 unaudited results today, reporting EPS of NGN15.01 (vs loss per share of NGN0.48 in Q2-20).
The board proposed an interim dividend of NGN4.00/s, which implies a yield of 2.2% on the last closing price of NGN184.80 (July 22).
Revenue for the period returned to the pre-pandemic level, as it grew by 132.1% y/y in Q2-21. The impressive revenue performance was driven by the solid growth across the business’ three segments – Network (+43.1% y/y; 71.0% of revenue), General Trade (+305.0% y/y; 24.0% of revenue) and Aviation (+893.2% y/y; 5.0% of revenue).
Cordros Research analysts attribute the increase across the business lines to an increase in demand ‘’given that the economy has effectively reopened and TOTAL’s ability to substantially push out volumes given its vast storage and distribution channels.’’
Across the product lines, Petroleum products and Lubricants and others lines grew by 138.5% y/y and 114.9% y/y, respectively.
Petroleum products contribution to total revenue increased to 74.9% (Q2-20: 72.8%) while Lubricants and others decreased to 25.1% (Q2-20: 27.2%). On a q/q basis, revenue increased by 26.9%, with all business segments – General Trade (+121.4%) and Aviation (+178.2%) – save for the Network segment (-18.5%), recording sturdy growth.
Gross margin (+382bps) came in higher as it expanded to 16.6% (Q2-20: 12.7%). The higher margin outturn was due to faster growth in revenue (+132.1% y/y) relative to the cost of sales (+122.0% y/y).
Cordros reckons that the increased cost of sales was influenced by the rally in crude oil prices (Average Brent price: USD69.08/bbl in Q2-21 vs USD33.39/bbl in Q2-20).
‘’Furthermore, though we do not have management’s confirmation as of writing, we believe that the derivative contracts TOTAL entered with its trading partners in the latter part of 2020 to hedge price risk may have expired.’’
Owing to the growth in gross margin, EBITDA and EBIT margins printed 11.5% and 9.5% (Q2-20: -0.1% and -4.5%), respectively.
Net finance costs printed NGN607.32 million in Q2-21 (vs net finance income of NGN1.26 billion in Q2-20). The outturn was driven mainly by a 97.2% y/y decline in finance income. As of HY-21, the company’s total debt increased slightly by 2.0% to NGN33.26 billion (FY-20: NGN32.61 billion).
Overall, the company recorded a PBT outturn of NGN7.43 billion in Q2-21 (vs Loss Before Tax of NGN386.90 million in Q2-20). Following a tax expense of NGN2.33 billion, the company’s PAT printed NGN5.10 billion (vs Loss After Tax of NGN373.97 million in Q2-20).
TOTAL’s Q2-21 performance was in line with expectations, as the topline surmounted last year’s low and returned to pre-pandemic levels.
The market reacted positively to the result, as TOTAL’s share price closed limit up as of market close. YTD, TOTAL is up +48.5%, compared to the Oil & Gas index (+39.1%), and the broader All-Share index (-4.2%).
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