Key highlights of the earnings forecast for Q1 2021
- Pre-tax profit is expected to rise to N2.23 billion, +55% Q-o-Q.
- Profit after Tax is expected to rise to N1.5 billion, +45.1% Q-o-Q
- Cost of sales is expected to hit N103.57 billion, +184.8% Q-o-Q.
- Gross profit is expected to increase to N12.4 billion, +43.7% Q-o-Q.
- Other income is expected to rise to N811.8 million, +117.7% Q-o-Q.
- Selling and distribution cost is expected to rise to N2.6 billion, +253.8% Q-o-Q.
- Administrative expenses are expected to increase to N7.92 billion, +31% Q-o-Q.
- Operating profit is expected to rise to N2.7 billion, +35% Q-o-Q.
- Net finance costs is expected to decline to N471 million, -16.1% Q-o-Q, due to relatively higher projected finance costs for Q1 2021.
The optimistic outlook by the firm might be attributable to predictions by analysts and experts of an upward trend in oil prices by 2021.
For example, the U.S Energy Information Administration (EIA) had in its November Short-Term Energy Outlook (STEO) predicted an upward trajectory in oil prices by 2021, just as global oil demand rises. It expects Brent to average $47 per barrel, up from $44 per barrel.
In addition, growing optimism over the approval of an effective vaccine soon (most likely on or before Q1 2021) might trigger an announcement effect.