Downstream oil firm Conoil Plc reported its weakest first-half performance in five years as declining sales, compressed margins, and rising borrowing costs hammered profitability.
Net profit plunged 89% to N900 million for the six months ended June 30, down from N8.02 billion in the prior year, based on unaudited results submitted to the Nigerian Exchange. Earnings per share dropped to 130 kobo from N11.56 previously.
Revenue declined 20.4% year-over-year to N143.65 billion from N180.57 billion, with the company citing reduced volumes in its core “white products” business – petrol, diesel, and jet fuel, which generates over 96% of total revenue.
While the cost of sales fell 19%, gross profit still contracted 35% to N11.36 billion, squeezing margins significantly. Distribution costs climbed 19% to N2.24 billion, and administrative expenses held steady, but financing costs delivered the heaviest blow.
Finance expenses more than doubled to N4.76 billion from N2.22 billion in H1 2024. Though debt decreased to N21.5 billion from N28.7 billion at the end of 2024, elevated interest rates on the company’s overdraft-dependent funding model proved costly. Interest payments alone consumed 42% of gross profit.
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The oil company, led by billionaire Mike Adenuga, generated positive operating cash flow of N12.57 billion, up from N8.8 billion previously, mainly through inventory reductions and improved collections.
However, cash and equivalents remained negative at N13.6 billion, reflecting earlier aggressive inventory accumulation and credit sales strategies to defend market position.
Trade receivables jumped to N89 billion, rising 24% from December 2024 levels, raising concerns about working capital management and credit risk amid Nigeria’s inflationary pressures and tight liquidity.
Second Quarter Recovery Falls Short
Conoil’s Q2 2025 results showed a modest improvement, with a net profit of N608 million compared to N292 million in Q1. Still, this uptick couldn’t offset first-quarter weakness when interest burdens and sluggish sales nearly wiped out earnings.
Management provided no earnings outlook or dividend announcements, while retained earnings increased marginally to N36.22 billion from N35.3 billion at year-end 2024. Book value per share slipped to N58.20 from N59.32 a year prior.
Conoil’s heavy dependence on white products—over 95% of sales—leaves it exposed to regulatory changes, price competition, and currency fluctuations. Limited diversification into LPG or higher-margin lubricants appears to constrain earnings stability.
With Dangote Refinery’s entry set to reshape downstream dynamics and supply chains, Conoil confronts intensified competition requiring enhanced operational efficiency and strategic repositioning.
Conoil shares have dropped 39.4% year-to-date to N245 from N387.2 at the start of 2025, reflecting weakened investor sentiment toward the oil marketer’s near-term prospects.
