Nairametrics|Independent oil marketer Nipco Plc has completed its acquisition of a 60% stake in Mobil Oil Plc. The company has decided to rename Mobil petrol stations as 11 (Double One) Plc, while retaining the old brand. It also unveiled plans to expand its retail network and further promote the Mobil brand of lubricants. Both companies will continue to run as separate entities.
The push to increase the share in the lubricant market is a strategic one. Lubricants command a higher profit margin compared to petroleum products. They are also manufactured within the country, which leaves them less susceptible to fluctuations in exchange rate compared to petroleum products. Mobil range of lubricants is among the top three lubricants in the country in terms of sales.
Increasing Mobil’s retail network would enable it to sell more products. Petroleum products are a low margin business, therefore, the higher the volume, the bigger the profits. Having a large retail network also positions Mobil to partner with other companies such as banks and eateries. These partnerships provide extra income outside its core business. They also lead to increased traffic into petrol stations, and this potentially leads to higher sales.
This move indicates a need for either of Mobil or Nipco to raise extra capital because setting up petrol stations is capital intensive in nature. Mobil also faces competition from number two retailer by volume, Forte oil, which also infolded plans to expand its own network in order to overtake industry leader Total plc.
Mobil recently released its financial statements for the year ended 2017. Revenue increased from N64.2 billion in 2015 to N94.2 billion in 2016. Profit after tax also went up from N4.8 billion in 2015 to N8.1 billion in 2016. The company declared a dividend of N8 per share.