• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Markets Equities Company Results

Elevated direct costs restrain MOBIL earnings growth

Meristem by Meristem
October 30, 2019
in Company Results
Elevated direct costs restrain MOBIL earnings growth, 11 Plc (formerly Mobil Oil Plc) to delist from NSE, appoints new director
Share on FacebookShare on TwitterShare on Linkedin

Lubes Maintain Prime Status

11 Plc’s (MOBIL) 9M:2019 scorecard has distinguished it apart from its peers – for its ability to consistently grow topline in a year with grim operating conditions. Relative to 2018, gross revenue added an impressive 13.17%, to print at NGN141.51 billion. While overall contribution as at 9M was only 18.73% (NGN26.50 billion), the lubricants segment remained as pivotal as ever to MOBIL’s revenue growth (+14.90% Y-o-Y). The Fuels segment also consolidated its recovery; 9M:2019 Fuel sales expanded by a sizeable 11.83% to pitch in at NGN114.04 billion (9M:2018: NGN101.98 billion).

Nevertheless, the segment’s overall contribution came in lower, as other business lines picked up. Growth in LPG retail was similarly sustained; MOBIL has made NGN0.97 billion this year alone, contributing 0.68% to overall revenue (9M:2018: 0.00%). MOBIL is strategically positioned to take advantage of the burgeoning cooking gas market and is putting NIPCO alliance (which has a strong market presence within this segment) to good use in driving volumes.

[READ MORE: MOBIL’s tepid recovery stirs optimism]

RelatedStories

Valentine's day business ideas

Businesses that will profit from today’s Valentine’s Day celebrations

February 14, 2023
11 Plc: Striving to close gap in petroleum product distribution under Adetunji Oyebanji

11 Plc: Striving to close gap in petroleum product distribution under Adetunji Oyebanji

November 13, 2022

Standalone Q3:2019 revenue was up 24.47% to NGN48.71 billion (vs. NGN39.13 billion in Q3:2018 and NGN46.73 billion in Q2:2019), driven by expansion in Lubricants (+26.41%; NGN9.16 billion) and Fuels (+22.90%; NGN39.19). LPG sales also grew 13.75% (+NGN0.36 billion) Q-o-Q. It is no longer realistic to expect a PMS price hike in 2019, but our outlook on the MOBIL’s topline growth, however, remains upbeat, on the back of lubes and other white products. 2019FY revenue growth is now expected at 16.43% (NGN191.65 billion).

Direct Costs Persist as a Key Pressure Point

In Q1, direct costs were at their highest – 92.80%. While this tapered to 91.67% in Q2, it picked up again in Q3, printing at 91.91% – a mirror of the challenges industry operators have with landing costs. Consequently, overall Cost-to-Sales as at 9M:2019 was 91.89% (NGN130.03 billion). For context, the ratio was only 89.78% (NGN112.26 billion) in 9M:2018. Operating expenses have been muted but ticked up by 34.53% (+NGN0.72 billion) in Q3 on the back of higher selling costs. Operating profit, therefore, contracted by 15.23% to NGN9.54 billion – a margin of 6.74% (9M:2018: 9.00%). Pretax profit and net income were also strained by higher finance costs and settled at NGN9.40 billion (- 19.27%) and NGN6.34 billion (-19.41%) respectively, implying a net margin of 4.48% (EPS: NGN17.59).

Rental Income Remains the Shock Absorber

 It is a renowned fact that MOBIL’s property business provides a solid buffer for its margins. In 9M:2019, rental income constituted 40.16% (NGN2.55 billion) of overall net income. For context, net margin would have been 2.68% without this key business segment. While this is higher than the 34.13% contribution for 9M:2018, it is lower in absolute terms by 5.16% (9M:2018: NGN2.69 billion). Having grown at a CAGR of 38.06% since 2015, we maintain our stance that rental income will remain the key profit driver for 2019FY, even though it is a non-core part of the business.

Higher Payables prop up operating accruals

As at 9M:2019, operating cashflow improved to NGN15.95bn (9M:2018: NGN4.45 billion) – dwarfing net income, as MOBIL recorded a substantial uptick in trade & other creditors (+140.73%).

[READ ALSO: Oil exploration breakthrough in Gongola opens up new frontiers]

Outlook and Recommendation

MOBIL has sustained the recovery that kickstarted in Q2, even though we maintain that there is ample room for progress. We are banking on further expansion in lubes and LPG to consolidate the positive momentum, but still expect a Y-o-Y contraction in net income by 10.34% (vs. previous expectation of -13.91%) to NGN8.36bn. 2019FY expected EPS is now NGN23.19, and with a target PE of 6.85x, we have a target price of NGN158.83, an upside of 7.39% to the current share price of NGN147.90 and a 4.11% premium to our previous target price of NGN152.56. We maintain a HOLD recommendation.


Follow us for Breaking News and Market Intelligence.
Tags: 11 Plc11 Plc's 9 months resultsCOMPANY RESULTSOn the Money
Meristem

Meristem

Related Posts

Valentine's day business ideas
Financial Literacy

Businesses that will profit from today’s Valentine’s Day celebrations

February 14, 2023
11 Plc: Striving to close gap in petroleum product distribution under Adetunji Oyebanji
Company Profile

11 Plc: Striving to close gap in petroleum product distribution under Adetunji Oyebanji

November 13, 2022
How to grow your customer base, keep your business in demand (Part 1) 
Financial Literacy

How to grow your customer base, keep your business in demand (Part 1) 

October 10, 2022
From reading to vending: The story of Chike Nwafor who makes a decent living from peddling books 
Business

From reading to vending: The story of Chike Nwafor who makes a decent living from peddling books 

October 2, 2022
Interim Government: What’s the fuss about?
Business

Twitter ban lift: Experts point to Nigerian government as the biggest loser

January 16, 2022
11 Plc (formerly Mobil Oil Nigeria Plc) declares dividend of N8.25 per share
Corporate deals

11 Plc set to acquire 51% equity stake in Capital Hotels Plc.

June 18, 2021
Next Post
Africa-focused venture capital firm hosts summit to boost female representation in tech 

Africa-focused venture capital firm hosts summit to boost female representation in tech 

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank
Zenth Bank








DUNS

Recent News

  • Wedex 2025—One day, one house, one goal
  • Onga ignites African culture and storytelling at AMVCA 2025 Culture Day with festival of flavours 
  • Anambra Govt acquires land in Aguata, Orumba for new industrial city 

Follow us on social media:

Recent News

Wedex 2025—One day, one house, one goal

Wedex 2025—One day, one house, one goal

June 12, 2025
Onga ignites African culture and storytelling at AMVCA 2025 Culture Day with festival of flavours 

Onga ignites African culture and storytelling at AMVCA 2025 Culture Day with festival of flavours 

June 12, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics