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Company Results

Elevated direct costs restrain MOBIL earnings growth

MOBIL’s 9M:2019 scorecard has distinguished it from its peers – for its ability to consistently grow topline in a year with grim operating conditions.



Elevated direct costs restrain MOBIL earnings growth, 11 Plc (formerly Mobil Oil Plc) to delist from NSE, appoints new director

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]

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.

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Company Results

MTN post N385.3 billion in revenues in 3 months as Nigerians guzzle data

MTN posted revenue of N385.3 billion representing a 17% increase from the N329.1 billion reported in the same period in 2020.



UACN appoints Toriola as new Director 

Nigeria’s largest telecoms network, MTN posted revenue of N385.3 billion representing a 17% increase from the N329.1 billion reported in the same period in 2020.

The double-digit growth is happening at a time when Nigerians have put the Covid-19 lockdown behind them and returned fully to work across the country. It is also happening on the back of tumultuous three months of SIM card registration bans and government mandates for all Nigerians to register to obtain their NIN and link the numbers to their SIM Cards.

MTN reported an 8% growth in Voice related revenue topping N208 billion for the period under review. Data revenue continued to lead revenue growth printing at N105.7 billion, a 42.6% growth year on year, showing heavy reliance on data by MTN’s 61.5 million internet subscribers, the highest in the country.

MTN commands the market share for internet subscriptions owning about 42% of the market. MTN also controls 40% of the Voice market share, the highest compared to any other competitor.

READ: Banks, MTN reach agreement, restore suspended USSD services

Commenting on the result, MTN’s CEO, Karl Toriola explained that “the effects of customer churn and the restrictions on new SIM sales and activations arising from changes in SIM registration regulations” had resulted in a decline of its subscriber base. This reduction led to a marginal drop of 71,000 in Q1 active data subscribers to 32.5 million but this did not affect growth. Rather they recorded an 86.7% increase in data traffic and a 48.5% increase in usage (MB per user) from the existing base.

Toriola explained that “the improvement in data services was supported by the completion of our acquisition and activation of an additional 800MHz spectrum” enabled the company to further increase traffic by 10% and enhance throughput by 79%.

MTN also doubled its revenue from Digital business rising to N3.7 billion during the quarter while FinTech related revenue rose 28.5% to N14.6 billion.


“Digital revenue grew by 101.0% and fintech revenue by 28.5% as customers continued to adopt more digital products and services, a trend accelerated by the pandemic. As of the end of March 2021, we had 449,100 registered MoMo agents and 4.6 million fintech customers.”

MTN also revealed it was being owed N40.3 billion by deposit money banks (DMBs) on services provided for under its USSD product. MTN did not recognize any revenue for its USSD business resulting in a flat year-on-year revenue for its enterprise business.

What next for MTN?

The GSM behemoth maintains it will continue to pursue double-digit revenue growth in 2021 through its 4G network expansion and positioning its FinTech Business for “accelerated growth” to unlock its full potential.

MTN also revealed it will continue to push for a revised commission paid to banks on its air time sales and is exploring other options of selling its airtime outside of banks.

“We will continue to sustain our expense efficiency programme to strengthen our financial position and support margins. We remain in dialogue with the DMBs on a pricing option for airtime sales commission while diversifying our airtime recharge channels to offer our subscribers more options to purchase airtime and stay connected.”

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Company Results

Dangote Cement incurs N97 billion taxes in 2020

The cement giant incurred its taxes on record.



One of Nigeria’s largest indigenous companies and the largest by market capitalization incurred a company income tax of N97 billion for the financial year ended December 2020.

This s according to the information contained in its full-year audited financial statements for the period under review.

Dangote Cement Taxes. 2018 was a tax credit.
Source: Nairalytics Research

Why this matters?

Dangote Cement has enjoyed Pioneer Status over the years and has often been criticized for not paying enough taxes despite its mega-profits.

  • The N97 billion incurred in 2020 is the highest company income tax reported by Dangote Cement since it became listed on the Nigerian Stock Exchange.
  • It incurred N49 billion in taxes in 2019 and got a tax credit of N89.5 billion in 2018.
  • Despite incurring N97 billion in taxes during the year, Dangote Cement’s actual tax paid was just N20.9 billion in 2020 compared to N4.6 billion paid a year earlier.
  • Tax incurred in the profit and loss statement is an accounting provision and is not always the actual tax paid in cash.
  • Putting it into context, the dividend paid during the year is N272 billion and interest payments to its creditors totals N48.2 billion.

Improved Cement Revenues

Despite the Covid-19 Pandemic, the Cement Giant reported full-year revenue of N1 trillion, the highest it has ever recorded since it was privatized almost 20 years ago. The company also reported a profit before tax of N373.3 billion only and a profit after tax of N276 billion, its highest since 2018.

Nigeria like most countries in the world has faced a challenging 2020 due to the impact of Covid-19 on the economy, especially the private sector. However, mega-corporations like Dangote Cement appear to have even performed better during the year. The cement industry in general also appears to have performed well during the year as the combined revenue of the top 3, Dangote Cement, Lafarge, and BUA rose to N1.47 trillion from N1.28 trillion.

The impressive result nonetheless, Dangote Cement’s margins remained strong during the year posting a gross profit margin of 57% in line with its 3-year averages. However, the higher taxes incurred in 2020 dropped profit margins to 26.7%. When compared to 2018 when it still enjoyed Pioneer status, the company posted profit margins of about 43%.

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