Daily Independent (Lagos)
Kingsley Ighomwenghian
18 November 2008
column
Investors got another opportunity for peer comparison last week, when directors of African Petroleum Plc submitted third quarter un-audited performance score-card to investors through the Nigerian Stock Exchange. The result is coming some weeks after the release of the result for the comparative period by Oando, which is gradually emerging as a conglomerate within the oil and gas industry. This has been helped by its unbundling into several subsidiaries bestriding the entire energy landscape from oil exploration to petroleum products marketing and gas piping across selected parts of the country.
A cursory look at the un-audited result for the third quarter result submitted by AP shows that although Oando recorded far larger income from sales, the management of AP is most likely to finish the year better on key analysis relating to efficiency. AP's share price is yet on technical suspension, following its recent bid to raise about N110 billion, as a result of which it was significantly insulated from the market meltdown that took several company share prices below or near their 2006 year end levels.
AP Plc
According to the company's performance within the first nine months of this year, turnover increased by about N48.141 billion or 64.34 per cent from the previous N74.814 billion to N122.955 billion. Of this amount, profit before tax for the period rose to N6.318 billion, improving by about N2.288 billion or 56.77 per cent over the N4.03 billion posted in the same period of last year. Profit attributable to shareholders grew by N2.23 billion or 79.04 per cent from N2.821 billion to N5.054 billion, translating to earnings per share of about 678 kobo, an equally robust jump from the previous 378 kobo per share. This represents an increased capacity of the Femi Otedola-led board to propose bigger dividend than the 700 kobo paid from the EPS of 942 kobo for the year ended December 31, 2007 at current growth level in the last three months of this year. This further translates to net profit margin for the period of 4.11 per cent, which means that the Femi Otedola-led board and management of AP converted 4.11 kobo of every Naira received from the sale of products, as against previous third quarter's 3.77 per cent (kobo).
It is believed that the result is an indication of the "new day, new vision, new spirit and a promise that greater things are coming," that is on the pipeline for AP as Tunde Falasinu, its chief operating officer told stockbrokers some months ago while the company was preparing its most recent capital raising exercise. The company recently offered new shares to raise N110.23 billion from the primary market, as a result of which its share price is still on technical suspension.
The amount is to be invested in corporate and products re-branding, construction of five mega stations and efficient information and communications technology system. This, he continued, is aside from plans to forage into Ghana with five outlets awaiting government licence, aside from completing its 15,000 metric tonne Onne products depot. This is to be complemented with another of similar capacity, construction of a 60 tonne depot for premium motor spirit (petrol) in Port-Harcourt, River State, another 120,000 metric tonne depot at Apapa, Lagos and a mobile cooking gas filing equipment I selected cities using composite transparent cylinders.
Q4 Forecast
AP raised the stake at the weekend with the forecast that it could generate as much as N43.7 billion from its operations within the last three months of the year. This is slightly more than the N40.985 billion average turnover in each of the first three quarters of this year, possibly boosted by the increased activity expected within the yuletide season when there is a lot of movement of people and goods by Nigerian traveling to and from to celebrate with their kiths and kin in their country home. The forecast turnover is expected to bring full year figure to about N166.655 billion, up from N102.026 billion in the 2007 full year.
Net profit from this is projected at N1.76bn, meaning that 2008 full year figures could grow to about N6.8 billion, from last year's N5.701 billion, all things being equal.
Oando Plc
Within the same third quarter ended September 30, directors of Oando indicated an improved capacity to pay juicier dividend at year end, judging from its 737 kobo earnings per share. This is better than previous 630 kobo per share earnings from which the directors offered a dividend of 600 kobo for the 2007 financial year. This is in addition to previous year's one new share offered for every five held by shareholders. According to the result, Oando posted N198.644 billion from the sale of petroleum products and services rendered within the period, representing an increase of about N24.363 billion or 13.97 per cent over the previous N174.281 billion. Of this amount and due to the capital intensive nature of the industry, the company reported profit before tax of about N7.292 billion, better by N2.876 billion or 65.12 per cent than the N4.416 billion reported in the corresponding nine months of last year. Profit attributable to shareholders stood at N5.56 billion, a N1.996 billion or 55.96 per cent improvement over the N3.565 billion of the previous third quarter.
In a review titled: "Growing through diversification," analysts at FSDH Securities Limited noted that the results indeed shows that percentage growth across the major parameters within the period when compared to the 2007 full year figure has increased by an average of 105.11 per cent . "This, the report noted, "suggests that the company has clearly out-performed the previous year', both in top-line and bottom-line."
But there is another analysis thrown up in the report indicating the need for management to seriously begin to look for burst pipes in its finances, judging from total cost as a percentage of turnover of about 96.33 per cent at the end of the 2008 third quarter. This was a marginally improvement from 97.47 percent in the corresponding period in 2007.
Between Oando and AP
Going from the above, it is clear that Oando with its diversified income base earns more from sales of petroleum products than AP, it however spending much more relative to turnover to undertake this expansion. As a result, Oando was able, within the period under review to record a turnover of about N198.644 billion and a net profit of N5.56 billion, which translates to net profit margin of 2.79 per cent, up marginally from 2.05 per cent in the corresponding period in 2007, but down from 2.95 per cent as at the end last full year.
AP however performed better in this regard, as its directors successfully turned in a net profit of N5.054 billion from turnover of N122.955 billion, which means that the management converted 4.11 kobo of every Naira earned from petroleum products sale, as against the previous 3.77 kobo.
Be the first to Write a Comment!
Copyright © 2008 Daily Independent. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
