Nigeria’s Biggest Downstream Companies Pay N5.2 Billion Income Tax in H1

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Nigeria’s largest downstream companies have paid a N5.2 billion tax to the federal government in the first six months of 2022, despite the sector facing challenges from a dirty petrol saga and regulation government continues.

The data from the Nigerian Scholarship Limited (NGX) showed that the combined income tax paid by Total Energies, Conoil, Eterna and MRS increased by 17% to 5.2 billion naira in the first half of 2022, from 4.4 billion naira in the first half of 2022. same period last year.

Income tax is deducted from profit before tax to give the actual profit for the period. Therefore, a higher tax will reduce the profit of the downstream sector for the year.

A further breakdown showed that Total Energies paid the highest income tax of 4.2 billion naira in the first half of 2022, an increase of 13% from 3.7 billion naira during the corresponding period last year.

Conoil paid income tax of 625 million naira in the first half of 2022, an increase of 23% from the 500 million naira paid last year.

MRS and Eternal also paid income tax of N123 million and N326 million respectively.

“With the challenges faced by oil companies due to the lack of full deregulation, oil and gas companies have been able to design their models to take advantage of business opportunities in the lubricants, diesel and aviation fuel sectors. “, Ola Alokolaro, partner, energy and infrastructure at Advocaat Law Practice, said.

Analysts believe these companies should maintain their resilience and offer decent returns to investors, even at mediocre valuations.

Also Read: Gasoline Prices Moderate in August, SNB Data Shows

“Taking the factors into account, we expect both revenue and profit growth for the majority of downstream players. deregulated tankers that would remain elevated,” analysts at Meristem Securities said.

“Improved economic activities would also result in increased sales volumes, which would further push the revenue increase. This would impact earnings for the period,” the analysts said.

BusinessDay findings showed Total Energies recorded revenue of N209 billion in the first half of 2022, an increase of 38% from N151.3 billion in the first half of 2021.

Revenue was derived from petroleum products which amounted to N147 billion as well as lubricants and others (62 billion naira) in the first half of 2022.

Profit for the year rose 8% to N8.5 billion from N8 billion in the first half of 2021.

Eterna recorded a 50% increase in revenue to N57.2 billion from N38 billion in the first half of 2021.

Eterna got the most revenue from fuel and lubricants, which amounted to N45.8 billion and N7.4 billion respectively.

Sales of Base Oil and Low Fuel Fuel Oil (LPFO) recorded N3.8 billion while trading activity contributed N183.2 million to total revenue of 57.2 billion naira in the half of 2022.

Afrinvest Securities analysts in a recent report said as they maintained their buy ratings on shares of Total Energies Marketing Nigeria Plc, Conoil Nigeria Plc and Ardova Nigeria Plc, but Ardova posted a net loss in first semester.

Compared to selected market peers (downstream) with an average P/E ratio of 14.1x, Nigerian downstream oil companies (3.1% of total NGX share capitalization as of 06/30/2022) are valued at 3.5x, according to data collected by Afrinvest Securities.

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