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Markets

Latest results show Conoil is getting squeezed out

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Petroleum marketer, Conoil Plc, late on Friday, released its financial statements for the year ended December 2017. The statement shows revenue increased by 35% from N85 billion in 2016 to N115 billion in 2017.

However, Profit before tax dropped by 46% from N4.2 billion in 2016 to N2.3 billion in 2017. Profit after tax fell similarly from N2.8 billion in 2016 to N1.5 billion in 2017. The company has proposed a final dividend of N2 per share, according to the statement.

Conoil is one of Nigeria’s major petroleum marketers. Other include NIPCO, Total, Mobil, and Forte Oil. 

Conoil Plc (formerly National Oil and Chemical Marketing Plc) was incorporated in 1960 as a private limited liability company. The company was converted to a public company on the 29th of August, 1991.

Conoil Plc closed at N31.80 on Friday’s trading session up 13.5% year to date.

Major marketers are delineated by their large networks of petroleum stations across the country. A comparison with major marketers listed on the Nigerian Stock Exchange (NSE) shows that the company is lagging.

Least Revenue

Conoil had the least revenue among the major marketers despite the increased revenue. The company made N115 billion as revenue in 2017.

Total was the market leader with financial year (FY) 2017 revenue of N288 billion. Next to it was Forte Oil Plc with N129 billion.

Profitability shows the same pattern

Conoil also made the least profit among the major marketers. The company earned a profit after tax of N1.5 billion for the 2017 FY. The drop in profit, however, was due to the absence of subsidy payments which occurred in 2016.

Forte Oil had the highest profit after tax of N12.2 billion, though one must discount the contribution of the Geregu Power Plant to its bottom line.

Total had the highest with a profit after tax of N8 billion. Closely on its trail was 11 Plc with a profit after tax of N7.5 billion.

Playing third fiddle in the lubricant space

Oil marketers have turned their focus to higher margin products, such as lubricants, to increase their bottom-lines, pending a full-scale deregulation of the industry.

Conoil had a slight drop in revenue from lubricants from N5.1 billion in 2016 to N5 billion in 2017.

Earnings from lubricants for Total increased from N38.8 billion in 2016 to N45.4 billion in 2017.  

Closely on its trail was Forte Oil with a revenue increase from N11.4 billion to N12.1 billion in 2017.  

Jaiz bank

Mobil Oil did not provide a breakdown of white product (regular petroleum products) and lubricant revenue.

Going forward

The increasing financial burden of the under-recovery (a diplomatese for subsidy) by the Nigerian National Petroleum Corporation (NNPC) means the likelihood of a price increase in 2019 after the general elections. The Dangote refinery is also expected to be completed in 2019. 

These events will give companies operating in the downstream sector some breather.

Should Conoil not restrategize, it may be left behind in what promises to be a tight race.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Cryptocurrency

Crypto aftershocks send Doge crashing by 10%

The fast-rising crypto was trading at below 60 cent posting losses of about 10% for the day on the FTX exchange.

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doge

The Crypto market is currently undergoing some form of price correction amid intensified profit-taking and fear of regulatory oversights, thereby pushing Dogecoin below the 60-cent price levels.

On the broader crypto market, for the day, about 171,444 traders were liquidated. The largest single liquidation order happened on Bybit-ETH valued at $5.98 million.

The fast-rising crypto was trading at below 60 cent posting losses of about 10% for the day on the FTX exchange, after trading near 70 cents some hours ago.

Consequently, market pundits argue that the crypto asset doesn’t have any real case use.

I worry that, once the enthusiasm rolls out, there are no developers on it, there are no institutions coming in. But it’s got this moniker of the people’s coin right now,” Galaxy Digital’s Michael Novogratz said on Squawk Box.

Dark clouds seem to be building upon recent reports that the Crypto market is about to face a wave of regulatory oversights when Janet Yellen the custodian of the world’s most powerful economy stated that the United States is yet to have the needed framework to deal with a host of money laundering, terrorist financing, and consumer risk protection that crypto raises.

Also, the U.S. Securities and Exchange Commission Chair, Gary Gensler advised U.S lawmakers on providing more regulatory oversight to the cryptoverse.

“Right now, the exchanges, trading in these crypto assets, do not have a regulatory framework either at the SEC or our sister agency, the Commodity Futures Trading Commission,” said Gensler, who further added, “there’s not a market regulator around these crypto exchanges, and thus, there’s really no protection against fraud or manipulation.”

That being said, the crypto’s stellar performance over the past few months can’t be ignored as Dogecoin maximalists try to convince the world that crypto is a serious asset class with powerful billionaires like Elon Musk and Mark Cuban giving the Crypto asset endless support.

Crypto experts further anticipate that ongoing institutional interest will make it difficult to predict if the Doge bubble is ripe as they try to take advantage of its incredible bullish momentum, which could in turn, push the crypto value higher.

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Currencies

Naira falls against US dollar as CBN extends Naira4dollar scheme indefinitely

The exchange rate between the naira and the US dollar, closed at N411/$1 at the I&E Window.

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Thursday, 6th May 2021: The exchange rate between the naira and the US dollar, closed at N411/$1 at the Importers and Exporters window, where forex is traded officially.

Naira fell against the US dollar to close at N411 to a dollar on Thursday, 6th May 2021, representing a 50 kobo decline when compared to N410.5/$1 that was recorded on Wednesday, 5th May 2021.

Meanwhile, the naira maintained stability at the parallel market as it closed at N485/$1, while Nigeria’s external reserve plunged $28.94 million to close at $34.76 billion on Wednesday, 5th May 2021.

Also, the apex bank issued an indefinite extension to its Naira4dollar scheme for foreign remittances, which was introduced some months ago. This is aimed at sustaining the country’s foreign exchange market liquidity.

Trading at the official NAFEX window

The naira depreciated against the US dollar at the Investors and Exporters window on Thursday to close at N411/$1, representing a 50 kobo decline when compared to the N410.5/$1 that was recorded on Wednesday.

  • The opening indicative rate closed at N410.37 to a dollar on Thursday, 6th May 2021, representing a 12 kobo depreciation when compared to the N410.25/$1 recorded on Wednesday.
  • Also, an exchange rate of N420.9 to a dollar was the highest rate recorded during intra-day trading before it settled at N411/$1. It, however, sold for as low as N400/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window declined by 38.4% on Thursday, 6th May 2021.
  • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover decreased from $172.52 million recorded on Wednesday, 5th May 2021 to $106.34 million on Thursday, 6th May 2021.

Cryptocurrency watch

Bitcoin, the world’s most popular cryptocurrency, slumped by 2% on Thursday to trade at $56,358.03.

  • As of 11:31 pm on Thursday, the highly valued cryptocurrency asset witnessed a decline despite soaring as high as 5.5% on Wednesday.
  • However, Ethereum recorded a marginal growth of 0.07% to close at $3,530.75, capitalising on the 9.1% gain recorded in the previous day.
  • The total crypto market capitalisation depreciated by 0.53% to close at $2.33 trillion on Thursday.
  • Meanwhile, payments giant, Visa and financial services provider TALA have partnered to boost cryptocurrency adoption in emerging markets.
  • This partnership is aimed at easing the process of converting, storing and using cryptocurrencies by the underbanked consumers.

Crude oil price stalls

Crude oil prices witnessed a bearish trading session on Thursday, 6th May 2021 as the oil price rally stalled due to the worsening covid-19 crisis in India.

  • Brent Crude dipped by 0.97% on Thursday to close at $68.29 compared to its closing price of $68.96 recorded at Wednesday’s trading session.
  • The decline in oil prices, which cut short the rally to $70 a barrel was due to a fresh record of new daily coronavirus cases reported by the third-largest importer of oil in the world.
  • Also, according to energy analytics firm OilX, China’s crude oil imports fell by 11% in April 2021 to stand at 10.41 million barrels per day.

External reserve

Nigeria’s external reserve plunged for the 12th consecutive day on Wednesday, 5th May 2021 as it dipped $28.91 million to close at $34.76 billion.

  • The nation’s foreign reserve declined from $34.79 billion recorded as of Tuesday, 4th May 2021 to $34.76 billion on Wednesday, representing a 0.28% decline.
  • Nigeria’s foreign reserve has dipped $497.36 million since 16th April 2021 to date.
  • Nigeria will hope to boosts its foreign reserve position as oil prices continue to rally high and the CBN intensified effort to encourage dollar remittances into the country.

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