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  • Conoil: Positioned for sustainable growth

    amidst major divestments and tough operating challenges in the downstream oil sector, Conoil Plc has continued to make considerable investments in demonstration of its long-term strategy and commitment to the downstream oil sector. With steady improvements in earnings and returns to shareholders, Conoil appears positioned for sustained growth

    At the annual general meeting of Conoil earlier this month, the excitement was obvious and shareholders were effusive in their commendation of the board and management of the downstream oil major. On the recommendation of directors of the oil major, shareholders unanimously approved the increase in dividend payout, sustaining a consecutive increase in cash dividend that has marked Conoil out in the downstream sector. Shareholders received total dividend of N2.15 billion for the 2016 business year, representing a dividend per share of N3.10. The company had paid N3 for the 2015 business year, a 200 per cent increase on N1 paid for the 2014 business year.

    The increase in dividend payouts reflected the improvement in the profitability of the company. Key extracts of the audited report and accounts of Conoil for the year ended December 31, 2016 had shown impressive improvements in the bottom-line as the company drew on internal cost efficiency to optimise top-line performance. Profit before tax rose by 24 per cent from N3.45 billion in 2015 to N4.28 billion in 2016. After taxes, net profit rose by 23 per cent from N2.30 billion to N2.84 billion. Turnover had risen from N82.9 billion in 2015 to N85.02 billion in 2016. Earnings per share consequently rose by 23 per cent from N3.33 in 2015 to N4.09 in 2016. The underlying fundamentals showed a more profitable and futuristic company. Pre-tax profit margin-which measures average profit per unit of sale, improved from 4.16 per cent in 2015 to 5.03 per cent in 2016. While the company retained about 10 per cent of net earnings in 2015, the improvement in profitability in 2016 allowed it to increase payout while simultaneously retaining nearly a quarter of net earnings for future business growth.

     

    Improving

    fundamentals

    The performance in 2016 reinforced the positive sustainable growth outlook of Conoil. In 2015, when most companies in the downstream petroleum struggled to stay afloat in the face of downturn in the country’s economy, Conoil bucked the trend, with profits soaring by 125 per cent to N3.45 billion from N1.53 billion in the preceding year. Key extracts of the audited report and accounts for the year ended December 31, 2015 showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Turnover however dropped from N128.35 billion in 2014 to N82.92 billion in 2015, following the industry trend as oil and gas companies struggled with global fluctuations and domestic constraints. Conoil had fallen back on its internal cost management and control to optimise the top-line performance. With this, gross profit margin improved from 10.74 per cent in 2014 to 13.91 per cent in 2015. Pre-tax profit margin had quadrupled from 1.19 per cent in 2014 to 4.16 per cent in 2015. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014.

    Notwithstanding the challenges in the Nigerian downstream oil and gas sector, Conoil has carved a somewhat unique position as the only indigenous downstream oil company with consistent year-on-year dividend payouts over the past 16 years. Over the past 16 years, the company has distributed about N23.2 billion as cash dividends to shareholders in addition to 20 per cent increase in their shareholdings as bonus shares. From a gross payout of N171.5 million in 2001, gross dividend has averaged about N1.5 billion over the past 16 years.

     

    Against the odds

    The performance of Conoil in 2016 belied the tough industry and macroeconomic environment that saw Nigeria, Africa’s biggest economy and the world’s sixth largest crude oil producer, running into historic recession. Most macro variables worsened significantly, GDP growth slumped to -1.56 per cent, inflation reached new height of 19 per cent, the Naira exchange rate hit N465 to Dollar and market capitalisation of the Nigerian Stock Exchange (NSE) contracted to N8.6 trillion from N11.658 trillion. The operating environment was indeed very challenging for companies, industries and manufacturers who battled hard with high cost of doing business as well as the poor state of infrastructure in the country.  Consequently, companies employed various strategies to survive and deliver impressive returns to shareholders who were daily seeing their investments being eroded as the economy spiraled downwards.

    With foreign exchange scarcity, prohibitive cost of funds and the reluctance of commercial banks to give credit lines which hindered marketers’ bid to aggressively import petroleum products, Conoil waded through and made good its pledge to put smiles on the faces of its shareholders with guaranteed returns on investments. The 2016 performance attested to the fact that Conoil had adequately prepared for the challenges, focused on achieving impressive growth and was ready to consolidate its leadership position in the downstream petroleum business.

     

    Shareholders’ voices

    Shareholders said the performance of the company has vindicated their trust in the board and directors of Conoil. Founder, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu said Conoil has demonstrated resilience with its performance, urging the directors of the company to continue to explore ways to grow shareholders’ value.

    President, Renaissance Shareholders’ Association, Ambassador Olufemi Timothy, noted that it was commendable that despite the downturn in the economy; with the attendant sharp increase in operating costs, Conoil still recorded impressive growth in all key areas.

    “Conoil’s performance for the year 2016 was very encouraging. Against the backdrop of a volatile and tough operating environment, the company still recorded strong margins which in turn impacted shareholders positively,” Timothy said.

    Grand Patron, Nigerian Shareholders’ Solidarity Association (NSSA), Chief Timothy Adesiyan, commended the directors of the company for keeping to their promise of maintaining consistent returns to shareholders.

    According to him, given the tight liquidity, rising cost of funds and the inability of petroleum marketing companies to import fuel in the face of little or no supply from the domestic refineries in 2016, Conoil has shown steadiness by growing its profit and increasing dividend payment to shareholders.

    Chairman, Alheri Shareholders’ Association, Kaduna, Alhaji Kazeem Olayiwola, attributed the impressive performance of Conoil to its continuous improvement in its operations noting that Conoil has continued to set standards in fuel retailing with world-class facilities and groundbreaking marketing initiatives that endear it to customers and place it far ahead of competition.

    “I am therefore delighted that this has translated to good dividends to shareholders at a time like this, we sure do have a bright future,” Olayiwola said.

    Looking forward

    In his address to shareholders, Chairman, Conoil Plc, Dr Mike Adenuga Jr, said the performance of the company in 2016 reflected its steadfastness and commitment to internal excellence, cost efficiency, manpower development, strategic planning and proactive investments.

    He added that the results also showed the remarkable support and loyalty that the company enjoys from its customers, patrons, dealers, distributors, transporters, suppliers and other stakeholders.

    He assured shareholders that directors of the company have continued to monitor emerging national and global developments to ensure that Conoil remains ahead of the competition.

    According to him, the company’s overall strategy shall continue to positively impact its current size and status while its investments in the required areas will continue to ensure effective and efficient delivery of its growth objectives.

    He outlined that the company is upgrading and constructing new facilities at its installations to further bolster its competitive edge and broaden its customer base across all segments of the business.

    “We are relentlessly evolving bigger and better business propositions with an eye on the future to continue to deliver excellent results,” Adenuga said.

    The management of Conoil stated that it achieved the impressive results by proactively capitalizing on every emerging opportunity in the sector and also explored new income streams. “We launched initiatives to strengthen our income base in the core segments of the business, especially retail, lubricants and aviation. We also reinforced our sales force with core competencies and consolidated on our dominance in the aviation business while investing in modern equipment and bringing in more strategic customers,” the company stated.

    Already, there are indications that the company is on the path of another resounding performance in the current fiscal year. Conoil posted a 28 per cent increase in turnover to N24.47 billion in the first quarter of 2017. Gross profit jumped to N3.31 billion in first quarter 2017 as against N1.979 billion in first quarter 2016. Profit after tax stood at N174.45 million in 2017 compared with a loss of N944 million in comparable period of 2016.

    On its strategy to improve on the result, the management of oil marketing company assured its investors that it will relentlessly evolve bigger and better business prepositions with an eye on the future to continue to deliver excellent results. Conoil stated that it has consolidated its stronghold on the aviation fuel marketing business in terms of spread, storage capacity and maintenance support. Its impressive storage facilities give the company unmatched capacity to meet the needs of local and international customers. The hi-tech bowsers as well as quality product and service delivery, which are of essence in the industry, are some of the reasons the company continues to attract the best of clientele in that sector.

    There have also been massive investments in the retail segment. The company is currently upgrading about 400 filling stations across the country.

    Conoil, owned by more than 143,000 shareholders and quoted on the Nigerian Stock Exchange (NSE), stands out as a beacon of indigenous ownership and government privatisation. It metamorphosed from the decrepit government-controlled National Oil and Chemical Marketing Plc, which was privatized in 2000. Conpetro Limited had acquired 60 per cent majority equity stake in 2000 and subsequently increased its shareholding to 74.40 per cent. Conoil has benefitted from a focused long-term majority core investor, with the attendant stable board and management. Particularly, the growth-focused and altruistic nature of the core investor led by Dr. Mike Adenuga (Jr.) has contributed greatly to the stability of the downstream oil company in the turbulent oil sector.

    While protracted reform and many lingering controversies continue to hamper the Nigerian downstream sector, Conoil’s commitment to long-term investments, farsighted board and management and local intelligence provide reasonable assurance on the prospects of the oil major in the years ahead.

  • EFCC recovers N328.9b from Total, Mobil, Conoil, six other marketers

    EFCC recovers N328.9b from Total, Mobil, Conoil, six other marketers

    The Economic and Financial Crimes Commission (EFCC), Kano Office, has recovered N328,988,296,990.62 from nine major oil marketers across the country.

    The retail oil marketers are Conoil Plc, Total Plc, OVH Energy Plc, Oando Plc, Forte Oil and Gas Plc, Mobil Plc, MRS Oil Plc, and NIPCO Oil Plc

    The recovery followed a petition against the leadership of Nigeria National Petroleum Corporation (NNPC) and its subsidiary, Pipelines and Product Marketing Company (PPMC).

    According to a statement by the EFCC Head of Media and Publicity, Mr. Wilson Uwujaren, the breakthrough was the consequence of an investigation into alleged diversion of N40 billion by the affected marketers.

    The statement said: “The petition alleged that a whooping sum of N40 billion had been diverted by the major oil marketers in connivance with the leadership of the NNPC and PPMC.

    “The EFCC in a swift reaction referred the petition to a special task force, who swung into action by conducting discrete investigation.

    “Findings by the operatives of the EFCC revealed that the oil marketers were actually indebted to the Federal Government to the tune of N91,519,485,204.44 between 2010 and 2016.

    “Further investigation into the allegation also revealed that the oil marketers had continued to obtain petroleum products from the government without proper payment, in violation of the NNPC/PPMC credit facility regulations.

    “The probe further led to the discovery of N258,928,926,351.93. Following the latter discovery, the total amount of debt stands at N349,818,411,556.37.

    “Upon the conclusion of the preliminary investigation, officials of NNPC/PPMC and all the managing directors of the concerned companies, which are NNPC retails, Conoil Plc, Total Plc, OVH Energy Plc, Oando Plc, Forte Oil and Gas Plc, Mobil Plc, MRS Oil Plc, and NIPCO Oil Plc, were invited to the Kano Zonal Office of the commission, where their statements were recorded following which the recovery process commenced.

    “So far, a sum of N328,988,296,990.62 has been recovered from the major oil marketers.

    “The outstanding debt now stands at N20,765,919,869.”

    Shady deals in the oil sector, including the fuel subsidy scandal, were said to have cost the nation over N1.3 trillion in 2011.

    But the manipulation of subsidy claim caused uproar nationwide

    The Presidential Committee on Verification and Reconciliation of Fuel Subsidy Payments had initially  indicted 21 firms for fraudulent claims that cost the nation N382 billion. The list was later increased to 25 by the Federal Ministry of Finance based on fresh evidence.

    The former chairman of the committee, Mr. Aigboje Aig-Imoukhuede, said  of the N422 billion scrutinised, N18 billion was found to be duplication and N21 billion was cleared.

    He confirmed that of the 116 oil marketing and trading companies (OM&T) invited, 107 honoured the invitation.

    He said: “Of the N422 billion, N18 billion was found to be duplication. So, the actual amount that was being verified is N403 billion. Of this amount, N21 billion was cleared and that leaves N382 billion as the sum in contention for which the committee recommended that the process of recovery should be made,” the committee report noted.

    “Painstaking efforts were made to ensure fairness; OM&T’s were given the opportunity to come back with as much documentation and even being re-interviewed where necessary.”

  • Ramadan: Conoil urges caution on roads

    The nation’s foremost petroleum marketing company, Conoil Plc, has wished Nigerians accident-free celebrations, as Muslim faithful celebrate the end of the 30-day fasting period.

    It enjoined motorists as well as passengers to exercise caution on the roads as they travel far and near to join their loved ones in celebration.

    The company urged motorists to keep a rein on their speed, obey traffic rules, wear seat belts, read caution signs and ensure their vehicles are in good condition, electrically and mechanically, before embarking on their trips.

    The oil major also enjoined the citizens to continue with the lessons of love and tolerance learnt during the fasting period to promote peace and unity in the country.

    As a way of moving the country forward, it encouraged Muslims and Nigerians to ensure that they put into practice virtues such as sacrifice, forgiveness, care and love, which are key ingredients to nation-building.

  • Conoil grows Q3 profit by 54% to N2.7b

    Conoil grows Q3 profit by 54% to N2.7b

    Conoil Plc continued to ride on the back of improved cost efficiency as the downstream oil major grew profit before tax by 54 per cent to N2.72 billion in the third quarter.

    Key extracts of the nine-month report of Conoil for the period ended September 30, 2016 released yesterday at the Nigerian Stock Exchange (NSE) showed that the company optimised marginal growth of six per cent in sales to grow pre and post tax profits by 54 per cent and 51 per cent respectively.

    The report showed that profit before tax rose by 54 per cent to N2.72 billion in third quarter 2016 as against N1.76 billion recorded in the comparable period of 2015. Profit after tax also increased by 51 per cent from N1.2 billion in third quarter 2015 to N1.81 billion in third quarter 2016. Total turnover had grown by six per cent to N63.95 billion as against N60.16 billion in corresponding period of 2015. Earnings per share thus increased by 51 per cent from N1.72 in third quarter 2015 to N2.61 by September 2016. Net assets per share also improved from N24.92 to N28.13.

    The management of the company attributed the impressive results to efficient allocation of resources, long term and pain-staking strategic business planning and strict adherence and implementation of global operating standards in all its business processes.

    The third-quarter performance further highlighted the steady profile of Conoil, after the downstream oil major bucked the industry trend to post impressive results in the previous 18 months. In the first half ended June 30, 2016, the company recorded profit before tax of N1.566 billion, representing a growth of 196 per cent from N528.5 million recorded in the corresponding period of last year. It also posted a 190 per cent increase in profit after tax from N359.4 million last year to N1.04 billion this year.

    Against the background of the tough macroeconomic environment, the board of directors of Conoil had announced a gross dividend of N2.1 billion for the 2015 business year, 200 per cent increase on the previous payout. Shareholders will receive a dividend per share of N3 for the 2015 business year as against N1 paid for the 2014 business year.

     

    Key extracts of the audited report and accounts for the year ended December 31, 2015 showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014. Shareholders’ funds increased from N16.1 billion in 2014 to N17.71 billion in 2015. Net assets per share closed 2015 at N25.52 compared with N23.19 in 2014.

    Many analysts saw the performance so far this year as indicative of possible increase in payouts to shareholders, in line with the company’s assurance to continue to improve returns to shareholders.

  • Shareholders praise Conoil over N2.1b dividend

    Shareholders praise Conoil over N2.1b dividend

    It was a unanimous vote and general commendation at the weekend as shareholders of Conoil Plc approved the payment of N2 billion as cash dividends for the immediate past business year.

    At the annual general meeting in Uyo, Akwa Ibom State, shareholders lauded the board and management of the downstream oil major for the 200 per cent increase in dividend payout, noting that the strong financial performance of the company and the increased dividend payout were major motivations for shareholders in this period of economic recession and stock market meltdown.

    With the approval of the gross dividend of N2 billion, shareholders will receive a dividend per share of N3 for the 2015 business year, 200 per cent increase on N1 paid for the 2014 business year.

    Key extracts of the audited report and accounts for the year ended December 31, 2015 showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014. Shareholders’ funds increased from N16.1 billion in 2014 to N17.71 billion in 2015. Net assets per share closed 2015 at N25.52 compared with N23.19 in 2014.

    National coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said the dividend increase reinforced the confidence of shareholders in the commitment of the board and management to shareholders’ value.

    According to him, the performance of the company in spite of economic recession shows resilience and the quality of the company’s management and its entire workforce.

    President, Renaissance Shareholders’ Association, Mr. Olufemi Timothy said the company’s performance in the past 21 months was a pleasant surprise citing the tough operating environment characterised by tight liquidity and rising cost of funds.

    “It is very heartening that Conoil has not only braced the odds, it has remained committed to maximising shareholders’ value and delivering superior returns,” Timothy said.

    Another shareholder, Mrs. Bisi Adedigba of Lagos Zone Shareholders Association, applauded what she described as a resounding performance, urging other companies to emulate the example set by Conoil.

    She added that the company’s efficient management of resources has made it a toast of investors, making indirect reference to the 80 per cent share price appreciation that greeted the announcement of the 2015 results.

    “We commend this impressive performance. It, indeed, calls for celebrations particularly at this austere times and I would recommend other companies to take a cue from Conoil’s laudable example,” Bakare said.

    In his address to shareholders, chairman, Conoil Plc, Dr. Mike Adenuga Jr. reassured shareholders that the company would continue to implement initiatives aimed at growing shareholders’ value in spite of the tough operating environment.

    According to him, Conoil is positioned to further consolidate on the gains recorded so far and ensure better returns to shareholders in the years ahead.

    “Our encouraging performance in the midst of adversities has further confirmed our determination to deliver strong results at all times to the satisfaction of our shareholders and other stakeholders,” Adenuga said.

    He said the company is focused on being one of the industry’s fastest growing companies and it will work harder to maintain and improve the growth momentum.

     

  • Conoil grows Q3 profit by 54% to N2.7b

    Conoil grows Q3 profit by 54% to N2.7b

    Conoil Plc continued to ride on the back of improved cost efficiency as the downstream oil major grew profit before tax by 54 per cent to N2.72 billion in the third quarter.

    Key extracts of the nine-month report of Conoil for the period ended September 30, 2016 released yesterday at the Nigerian Stock Exchange (NSE) showed that the company optimised marginal growth of six per cent in sales to grow pre and post tax profits by 54 per cent and 51 per cent respectively.

    The report showed that profit before tax rose by 54 per cent to N2.72 billion in third quarter 2016 as against N1.76 billion recorded in the comparable period of 2015. Profit after tax also increased by 51 per cent from N1.2 billion in third quarter 2015 to N1.81 billion in third quarter 2016. Total turnover had grown by six per cent to N63.95 billion as against N60.16 billion in corresponding period of 2015. Earnings per share thus increased by 51 per cent from N1.72 in third quarter 2015 to N2.61 by September 2016. Net assets per share also improved from N24.92 to N28.13.

    The management of the company attributed the impressive results to efficient allocation of resources, long term and pain-staking strategic business planning and strict adherence and implementation of global operating standards in all its business processes.

    The third-quarter performance further highlighted the steady profile of Conoil, after the downstream oil major bucked the industry trend to post impressive results in the previous 18 months. In the first half ended June 30, 2016, the company recorded profit before tax of N1.566 billion, representing a growth of 196 per cent from N528.5 million recorded in the corresponding period of last year. It also posted a 190 per cent increase in profit after tax from N359.4 million last year to N1.04 billion this year.

    Against the background of the tough macroeconomic environment, the board of directors of Conoil had announced a gross dividend of N2.1 billion for the 2015 business year, 200 per cent increase on the previous payout. Shareholders will receive a dividend per share of N3 for the 2015 business year as against N1 paid for the 2014 business year.

  • Conoil leads equities’ gainers as half-year profit rises by 196%

    Conoil Plc continued  as the current highest-gaining stock at the stock market as the share price of the downstream oil major yesterday recorded the highest and the maximum daily  allowable gain of 10.24 per  cent to close the first trading session at N35.10 per share. Under the rules at the Nigerian Stock Exchange (NSE), share prices can only move-up or down, within a band of 10 per cent every trading day.

    The stock market reopened this week with strong underlying sentiments for equities, but profit-taking transactions on a handful of highly capitalised stocks shaved off N7 billion from the aggregate market value of quoted companies at the NSE. Despite preponderance of gainers to losers at 27 to 18, the benchmark index, the All Share Index (ASI) declined marginally by 0.07 per cent due to losses recorded mainly by Nestle Nigeria, Nigerian Breweries, Forte Oil and Seven-Up Bottling Company.

    The sustained uptrend yesterday brought the total gain so far this month by Conoil to 70.6 per cent as the oil major continued to excite investors with improved fundamentals. Against the background existing scramble on the heels of its full-year audited report for 2015, Conoil had at the weekend released its half-year report for 2016 with 196 per cent and 190 per cent growths in pre and post tax profits respectively.

    Conoil’s share price had risen by 33.84 per cent last week at the stock market, the highest by any stock and more than a double of the closest gain. Conoil’s share price rose from N23.79 per share to close the week at N31.84 per share. The ASI had indicated average gain of 1.02 per cent for the stock market last week.

    Key extracts of the six-month report for the first half ended June 30, 2016 showed that profit before tax rose from N528.5 million in first half 2015 to N1.566 billion in first half 2016, representing an  increase of 196 per cent. Profit after tax jumped by 190 per cent from N359.4 million in first half 2015 to N1.04 billion in first half 2016. Gross profit had risen from N4.78 billion in first half 2015 to N5.24 billion in first half 2016. However, turnover declined marginally to N39.5 billion in 2016 as against N43.03 billion in comparable period of 2015.

    The first-half report raised the prospects of increased return for shareholders for the current business year. Earnings per share rose by 190 per cent from 52 kobo in first half 2015 to N1.50 in first half 2016. Net asset per share increased from N23.71 to N24.02. Gross profit margin improved from 11.11 per cent in first half 2015 to 13.26 per cent in first half 2016. Pre-tax profit margin, which measures the profitability of the company’s business, tripled from 1.23 per cent in first half 2015 to 3.97 per cent in first half 2016.

    Analysts said the company’s results surpassed expectations, considering the volatility in the downstream sector of the oil industry and the nation’s economy.

    Capital market analysts were also of the view that going by this performance, the company would end up with a higher dividend payout for its shareholders at the end of the current financial year.

    Conoil recently declared a total dividend payout of N2.08 billion for the 2015 business year, representing a dividend per share of N3, 200 per cent above N1 per share paid for the 2014 business year.

    The capital market has been reacting positively to the company’s laudable 2015 financial performance, with a recent surge in the demand for its stock by investors. So far, Conoil investors have reaped a return of more than 60 per cent in the past two weeks.

    Conoil said the result showed that it outperformed its previous year both in the top-line and should exceed bottom-line performance at the current run-rate.

    According to the company, the impressive performance was linked to its innovative means of manufacturing and distributing products, huge financial investments in developing high-performance products and in the provision of services that matched and surpassed international standards.

    Key extracts of the audited report and accounts for the year ended December 31, 2015 showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Turnover dropped from N128.35 billion in 2014 to N82.92 billion in 2015, following the industry trend as oil and gas companies struggled with global fluctuations and domestic constraints. Conoil fell back on its internal cost management and control to optimise the top-line performance. With this, gross profit margin improved from 10.74 per cent in 2014 to 13.91 per cent in 2015. Administrative expenses dropped from N8.16 billion in 2014 to N6.89 billion in 2015. Pre-tax profit margin, which measures the underlying profitability of the company, quadrupled from 1.19 per cent to 4.16 per cent. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014. While the paid up share capital remained unchanged at N346.98 million, shareholders’ funds increased from N16.1 billion in 2014 to N17.71 billion in 2015. Net assets per share closed 2015 at N25.52 compared with N23.19 in 2014.

  • Conoil: Growing shareholders’ value

    Conoil: Growing shareholders’ value

    Conoil drew on its efficient internal cost control and intrinsic underlying business strengths to deliver impressive performance in its latest audit report. The announcement of the results has seen investors scrambling for the shares of the downstream oil major. In this report, Capital Market Editor, Taofik Salako, highlights the key performance indicators that have been driving the rally for Conoil

    Conoil opens today as one of the most-sought-after stocks in the Nigerian stock market. The company’s share price rose by 15.6 per cent last week, the second highest gain recorded in the entire stock market. Against the facts that the average benchmark index for the Nigerian stock market, the All Share Index (ASI), indicated that the market recorded an average decline of 0.65 per cent and there were 38 losers to 24 gainers, the performance of Conoil underscored the scramble for its stocks. The increased demand for the downstream oil major was fuelled by the release of its annual report and accounts for the year ended December 31, 2015.

     

    Impressive fundamentals

    Key extracts of the audited report and accounts for the year ended December 31, 2015, showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Turnover dropped from N128.35 billion in 2014 to N82.92 billion in 2015, following the industry trend as oil and gas companies struggled with global fluctuations and domestic constraints. Conoil fell back on its internal cost management and control to optimise the top-line performance. With this, gross profit margin improved from 10.74 per cent in 2014 to 13.91 per cent in 2015. Administrative expenses dropped from N8.16 billion in 2014 to N6.89 billion in 2015. Pre-tax profit margin, which measures the underlying profitability of the company, quadrupled from 1.19 per cent to 4.16 per cent. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014. While the paid up share capital remained unchanged at N346.98 million, shareholders’ funds increased from N16.1 billion in 2014 to N17.71 billion in 2015. Net assets per share closed in 2015 at N25.52, compared with N23.19 in 2014.

    The board of directors of the company has recommended distribution of N2.1 billion as gross dividend for the 2015 business year, 200 per cent above N694 million distributed for the 2014 business year. Shareholders will receive a dividend per share of N3 for the 2015 business year as against N1 paid for the 2014 business year. At the opening price today, the dividend per share represents a dividend-yield of 12.6 per cent, clearly a high yield and within the highest bracket for the stock market. The latest results have further buttressed analysts’ position that Conoil, along with several other stocks at the stock market, is undervalued. With net assets per share of N25.52, today’s share opening price of N23.79 represents a significant undervaluation of the stock, given that a typical share price represents multiple of the net asset.

     

    Consistent returns

     

    Notwithstanding the challenges in the Nigerian downstream oil and gas sector, Conoil has carved a somewhat unique position as the only indigenous downstream oil company with consistent year-on-year dividend payouts over the past 15 years. Over the past 15 years, the company has distributed about N21 billion as cash dividends to shareholders, in addition to 20 per cent increase in their shareholdings as bonus shares. From a gross payout of N171.5 million in 2001, gross dividend has averaged about N1.4 billion over the past one and a half decades. The 2015 distribution represents the second highest gross payout during the period, trailing N2.78 billion distributed for the 2013 business year. Current earnings yields, based on the full year performance, stands at about 16.2 per cent, the highest within the oil and gas sector. Earnings yield- a forward-looking indicator that relates fundamental earnings to share price, provides a bridge between corporate earnings and share pricing trend.  While the year-to-date return and latest operational fundamentals illustrate the historic returns by a stock, earnings yield underlines the potential return and intrinsic value in a stock. Earnings yield is calculated by finding the percentage of current net earnings per share of a stock to the current share price at the stock market, to determine the probable underlying yield for the stock. Besides its importance as a measure of intrinsic returns, earnings yield also denotes probable cash dividend range given its unique feature as a ratio of basic earnings per share. Earnings per share represents net profit earned by every outstanding share of a company within a period. The board, subject to approval of the shareholders at a general meeting, will then decide on the amount of dividend to be paid from the earnings per share. For companies with long-established dividend payment policy, probable dividend could be deduced on the basis of current earnings per share.

     

    Diversified ownership, stable board

     

    Conoil is owned by more than 143,000 shareholders and it’s quoted on the Nigerian Stock Exchange (NSE). The company commenced operations in 1927 under the name Shell Trading Company. It was incorporated as a limited liability company in 1960 and converted to a public limited liability company in 1991. Conoil metamorphosed from the decrepit government-controlled National Oil and Chemical Marketing Plc, which was privatized in 2000. Conpetro Limited had acquired 60 per cent majority equity stake in 2000 and subsequently increased its shareholding to 74.40 per cent. Conoil has benefitted from its diversified retail shareholders’ base, with the active shareholders’ nudge for better returns, and a focused long-term majority core investor, with the attendant stable board and management. Particularly, the growth-focused and altruistic nature of the core investor led by Dr. Mike Adenuga (Jr.) has contributed greatly to the stability of the downstream oil company in the turbulent oil sector. Adenuga chairs a stable board of director that has steered the company since privatization. The company has appropriate governance structures including board and management committees in compliance with Nigeria’s code of corporate governance for publicly quoted companies and international best practices. Beyond compliance with laws and regulations, Conoil operates a more respectable corporate governance standard. While Adenuga’s Conpetro-as the core investor, provides strategic and technical supports to the company, Adenuga receives no emoluments and Conpetro charges no fees- an uncommon noble stand in true spirit of core investor contrary to rampant practices, especially in the oil-marketing sector, where substantial funds are funneled to core investors, sometimes to the detriment of other shareholders.

     

    Management forecasts

     

    The management of Conoil attributed the strong performance in 2015 to efficient management of resources, effective cost control policy as well as gains from its huge investment in the expansion and upgrade of its facilities.

    “For us, the downstream sector remains fundamentally attractive and viable today and in the future.  With our clarity of direction and focus, our company’s long-term success is assured. We will sustain this improved performance and vigorously pursue our aspiration to remain the nation’s leading petroleum products marketer and one of the most profitable quoted companies,” the company stated in an explanatory note to the results.

    At the company’s last annual general meeting, Adenuga Jr. had promised shareholders that notwithstanding the tough macroeconomic conditions and the challenges in the downstream petroleum sector, the company would explore to the fullest, new opportunities that abound in the industry to its advantage.

    He assured that the company is determined to sustain the culture of taking advantage of opportunities in the emerging markets and organising efforts and resources   along   enduring   strategies   for   top performance. “There is an ongoing   review of our business processes   to   boost commercial, innovation and   supply chain efficiencies, to improve   focus on growth opportunities and to enhance competencies that will drive accelerated progress,” Adenuga said.

     

    Looking forward

     

    Against the background of global and national macroeconomic situation as well as industry-specific challenges, the natural poser will be the sustainability of Conoil’s performance. Conoil has repeatedly noted that the foundation for its impressive performance was hinged on consistent investments and committed to expansion of its businesses. These are also supported by the general overhaul of its facilities and equipment, the optimization of its resources and total elimination of waste in its operations.

    According to the board’s strategic outlook and management guide, Conoil is gearing up for the anticipated challenges and opportunities   that the emerging new order  in the downstream oil sector  is expected to usher in. The company said it has flagged off various projects and initiatives which will help it to capitalise and reinforce its strong position to     deliver profitable growth for its teeming shareholders. It has stepped up investments in the core segments of the downstream business with a     view to consolidating its competitive edge and breaking new grounds to further boost its market share.

    The strategic investment project entails upgrading and construction of facilities in the priority areas, such as retail, lubricants, aviation and specialized products, so as to     provide additional capacity that will enable it to meet the long-term needs of its growing business.

    The focus of the initiatives being   pursued, according to Conoil, is to   deepen the company’s market penetration   and  establish new streams   of   income  to  further  strengthen its competitive edge. Conoil’s state of the art facilities at its depots in Lagos and Port Harcourt give it unparalleled leverage in storage and blending of products, in conformity with the world’s best industry practices. The depots ensure availability and prompt delivery of products   and services to customers nationwide. In Port Harcourt, the company regularly augments its storage capacity for different products to meet the demands of customers in the south-south, south-east and the northern regional markets. This has improved throughput at Port Harcourt and also saved transportation time and cost of moving products from Lagos to these areas.  Similarly, a new full-fledged depot in Calabar is well under way, which would have storage tanks for Aviation Turbine Fuel, Automotive Gas Oil and Premium Motor Spirit. The depot would also have hi-tech loading gantries with allied facilities of international standard.

    As part of efforts to boost its bottom-line,  Conoil has also repositioned its lubricants  business, building two additional state-of-the-art oil blending plants in Apapa, Lagos and  another one in  Port Harcourt, all of which the management said had  pushed up its     production capacity significantly. The company also introduced into the market, a new     brand of engine oil called Okada Golden Super which is manufactured specially for 4-stroke motorcycles and tricycles. The  company   is   also   consolidating its stronghold   on   the   aviation   fuel marketing business in terms of spread, storage capacity and maintenance support. Major airlines     plying the Nigerian airspace have been flocking to the company to take full advantage of the   unique  services. Its impressive  storage   facilities   give   the   company   unmatched     capacity to meet the needs of local and international customers. The hi-tech bowsers as well as quality product and service delivery, which are of essence in the industry, are some of the reasons the company continues to attract the best of clientele in that sector.

    There have also  been   massive   investments in   the  retail segment.  The company   is   currently upgrading over 400 filling stations across the country; while plans are on to     acquire another 250 stations that would significantly boost its retail network. Besides the     ongoing project of building one mega station in each state capital, it has sustained its     special university campus scheme, under which retail outlets are being located on the     campuses of designated universities and polytechnics across the country.

    Besides, Conoil’s Liquefied Petroleum Gas (LPG)-produced and distributed from its state-of-the-art LPG bottling plant located in Ikeja, Lagos; has become a major source of industrial and domestic cooking fuel. The plant has the capacity to bottle 5,000 cylinders a day, boosting supply of cooking gas in the country.

    No doubt, with the protracted reform and many lingering often-negative controversies in the Nigerian downstream sector, the industry remains challenging as indicated by sluggish top-line, industry-wide decline in margins and negative bottom-line growth by most companies. But ongoing growth initiatives by Conoil including ambitious expansion into the West African market; increase in storage, blending, distribution, retail and dispensing facilities and strong linkages and partnerships with other businesses provide reassurance on future growth prospects. Conoil’s commitment to long-term investments, supportive and farsighted board, dynamic management and sound local intelligence provide reasonable assurance on the prospects of the oil major in the years ahead. It is one assurance that shareholders need most in the face of the macroeconomic challenges, including the price depression at the stock market.

  • Conoil urges safe driving at sallah

    Conoil urges safe driving at sallah

    A major oil marketer, Conoil Plc, has enjoined the citizenry to celebrate the Eid-El-Kabir by driving safely.

    The firm urged prayer for genuine peace, unity and progress of the country as it battles to overcome its trying period.

    In a message to felicitate with Muslims, Conoil advised citizens to imbibe and exhibit the spirit of sacrifice, good neighbourliness and selfless service – the key ingredients, it said, are needed to lift the country out of the economic downturn.

    “This year’s feast of sacrifice has come at most trying period for the country. Muslims and indeed all Nigerians must go the extra mile to work for the good of the country above personal or sectional interest,” the company said in a statement.

    It added that the core values of Eid-El-Kabir, which are total submission to the will of God, goodness to one another and service to humanity, must be practiced by the citizenry.

    The fuel marketer urged Nigerians to strive for moderation in their consumption during the festival, adding that as they travel to felicitate with friends and relations, they should ensure that their vehicles are in good shape, avoid reckless driving on the roads and adhere to safety rules.

  • Conoil urges national rebirth

    Conoil urges national rebirth

    The Management of Conoil Plc has enjoined Muslims in Nigeria and all over the world to put into practice the lessons learnt during the holy month by promoting a culture of religious tolerance and peaceful co-existence.

    Conoil implored Muslims and Nigerians in general, to use the exceptional period of self-denial, forgiveness of sins and mercy, to reflect on their spiritual lives as individuals and contribute more meaningfully towards the unity, stability and progress of the country.

    The company noted that the period has again provided another opportunity for Nigerians to reorder their value system, enact a positive change in their lives and work towards making the country great.

    “Despite Nigeria’s huge potential, the country has experienced stunted growth. Brotherhood, forgiveness, moderation and sacrifice are key lessons of Ramadan. We urge Nigerians to continue to make these lessons part of their lives, even after Ramadan. These will help us overcome the myriads of challenges facing us as a nation and propel Nigeria to assume its leadership position in Africa and among the black race,” the company said.

    The major fuel marketer equally advised Nigerians to be conscious of their safety on the roads as they journey to visit family and friends by adhering strictly to road safety regulations.

     

    It enjoined motorists to keep a rein on their speed, obey traffic rules, wear seat belts, read caution signs and ensure their vehicles are in good condition, electrically and mechanically, before embarking on their trips.