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Blurb

Total Plc must quickly move past one of its toughest year yet

Total Plc’s revenue plummeted by 30% in 2020 compared to 2019.

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Total Nigeria caught in the oil demand and lockdown saga

The reliance on and importance of PMS – gas and diesel in Nigeria cannot be overplayed. The deplorable state of our electricity ensures at the very least that oil companies like Total plc stay in business. Afterall, what business or household can thrive without power?

2020 has been shocking. The sort of year wherein businesses suffer shortages in the shadow of plenty and the oil sector is no exception. The performance of oil particularly, in 2020 was dreadful, to say the least. Total plc as a case in point suffered severe cutbacks in revenue from all of its operating heads. The general consensus is that this poor return is clearly product of the instabilities experienced through the course of the year. Covid-19 did wreak havoc on lives and livelihood necessitating various restrictions within the country. The restrictions meant decreasing activities which as a consequence upset travels, the operations of businesses and individuals. For Total Plc it meant just one thing – DWINDLING TURNOVER.

Total plc has hitherto been a leader in its sector. They generate revenue from three major expenditure heads namely Network, General Trade and Aviation.

Sales from Network refers to the turnover total generates from sales to service stations. General Trade refers to revenue obtained from its sales to corporate customers excluding aviation. Aviation, as the name implies refers directly to revenue obtained from its business with customers in the aviation industry.

Revenue generated from these segments coupled with proper cost monitoring has hitherto placed Total Plc at the summit as industry leaders. However, this year tells a different tale.

Total Plc’s revenue plummeted by 30% in 2020 compared to 2019. The company made N292billion in 2019 and N204billion in 2020 FY. The respective operating segments each suffered some responsibility on this. Sales from Network (its most fruitful revenue source) made only N143billion in FY 2020 whereas it made 205billion in 2019, that’s 30% reduction. Aviation and General Trade weren’t spared. Aviation dropped 54% from N26billion to N12billion while General Trade was only able to generate N49billion against N61billion in 2019.

These poor records were always going to reflect in closing figures at FY and pile further misery on investors who have endured what seems a horrid year. Total Plc finished with a position 1.5% worse off than they did in 2019 at N2.2billion. But to their credit, the extent of reduction was pleasantly a far-cry from what the differences in revenue had suggested. This is due to proper handling of expenditure heads particular finance costs.

Total Plc recorded N2.9billion as finance expenditure in repaying interest on loans and overdraft, compared to the N7.9billion it made in interest payments for year 2019. This singular factor amongst some others made for a more presentable finish to this year’s campaign. The slow but steady restart of activities offers the inclination that improvements are at the very least an expectation this year. We will see from first quarter results.

Ekene Onyeama is a Chartered Accountant currently plying one of the Tier one Banks in Nigeria. He started out his career at Ideascorp Limited, a private company in the hospitality industry where he served as the accountant before switching to banking. Ekene enjoys analyzing companies. He likes to write and is very excited by company valuations. He can be reached on Twitter @Ekenergy_

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