by Niyi Jacobs
Total Energies Marketing Nigeria Plc reported a surprise loss in the first quarter of 2025, with profit before tax plunging 93% to ₦1.12 billion and the company posting a post-tax loss of ₦120 million, compared to a ₦11.4 billion profit in Q1 2024.
The poor showing came despite lower cost of sales, with analysts pointing to declining revenues and surging expenses as key drivers of the weak bottom line. Revenue dropped 18% to ₦221.62 billion, weighed down by a sharp 29% fall in white product sales—including PMS, AGO, and ATK—which make up over 70% of Total Energies’ income.
The company attributed its revenue decline to a challenging operating environment, including domestic price distortions and increased competition from local refiners such as Dangote Refinery. However, peer companies like MRS Oil and Eterna posted revenue gains in the same period, suggesting that Total Energies’ struggles may also stem from operational inefficiencies or market share erosion.
Further signs of stress emerged in the company’s financials: operating cash flow fell 76% to ₦6.1 billion, trade and other receivables rose 9.4%, and interest payments on bank drafts spiked 270%. Total’s interest coverage ratio dropped from 10.2 times to just 1.03 times, indicating it is barely earning enough to cover debt obligations.
Gross profit also dropped 30% to ₦24.5 billion, with margins shrinking to 11%. Operating expenses rose 34%, compounding pressure on profits.
Still, there was a bright spot in lubricant sales, which rose 29% to ₦66.1 billion. The segment now contributes 30% of total revenue, up from 19%, and enjoys higher margins of 17.77% compared to the 4.33% margin for white products. This suggests a strategic pivot toward higher-value products, though it’s not yet large enough to offset losses in the core fuel segment.
With its stock still trading at a price-to-earnings ratio of 15—above the sector average of 11—analysts say the company’s premium valuation may be unsustainable unless earnings quality improves. Despite an attractive dividend yield of 6.68%, the stock has gained just 1% year-to-date, lagging far behind the 81% rally seen in 2024.
Market watchers advise a HOLD rating on Total Energies for now, urging investors to monitor any rebound in fuel sales, tighter cost management, and improvement in cash flow before reconsidering the stock’s growth potential.
