Conoil Plc: Battling to curb declining revenue
Conoil Plc is Nigeria’s oil marketer of choice, providing fuel for transportation, energy for heat and light, ad retail services for everyday needs.
Conoil is one of the most formidable names in Nigeria’s downstream petroleum industry. The company engaged in the marketing of refined petroleum products and also in the manufacturing and marketing of Liquefied Petroleum Gas (LPG) for domestic and industrial use. The company is reputed for its unwavering commitment to excellent products and service delivery for maximal customer satisfaction.
As the first and largest indigenous oil marketing company in Nigeria, it has over the years gained a unique understanding of research and quality control, which it continuously apply in all its businesses in order to offer the best propositions to customers. Conoil developed innovative means of manufacturing and distributing its products through its wide network of outlets.
The company invests its financial and technical resources in the development of highperformance products and in the provision of services that match or even surpass international standards, paying strict attention to the finest details of health, safety and environmental best practices.
Conoil Plc, Nigeria’s first and largest indigenous oil marketing company, began operations in 1927 under the name Shell Company of Nigeria (SCN) and later Shell Company of West Africa. It was incorporated as a private limited liability company in 1960 and registered with the Nigerian Stock Exchange (NSE) as a public liability company in 1989.
Earlier in April 1975, the Federal Government of Nigeria acquired 60 per cent shares of the company through the Nigerian National Petroleum Corporation (NNPC) and the company became known as National Oil and Chemical Marketing Company (NOLCHEM). In the year 2000, the Federal Government, through the Bureau of Public Enterprises (BPE), bought 40 per cent issued ordinary shares of the company held by Shell Company of Nigeria (UK) Limited.
Following the privatisation of the company, Conpetro Limited acquired 60 per cent of the issued shares and as a result of a rights issue made by the company in 2002, Conpetro now holds 74.4 per cent of the issued capital; while the Nigerian public holds the remaining 25.6 per cent. The board Conoil is managed by a board of experienced directors and a dynamic team of seasoned professionals who make up the management personnel.
Dr. Mike Adenuga (Jr.) GCON Chairman
Conoil has a nine man board headed by Dr. Mike Adenuga (Jr.), Dr. M.E. Omatsola Director, Mr. Mike Jituboh Director, Mr. Ike Oraekwuotu Director, Engr. Babatunde Okuyemi Director, Mr. Wasiu Adeyinka Adebiyi Executive Director, Miss. Abimbola Michael-Adenuga Executive Director, Mr. Akin Fabunmi Executive Director, and Mr. Charles Uwaechie Executive Director. Financing Structure Conoil Plc retained earnings declined from N13.865 billion in 2013 dropped by N1.941 billion or 14 per cent to N11.924 billion in 2014. Its retained earnings in the last five years have been appreciating year on year apart from 2012 when it recorded a slight drop it recorded N11.489 billion in 2012 from N12.509 billion it retained during 2011. Its retained earnings in 2010 were N8.518 billion from N6.769 billion it retained in 2009.
Shareholder’s fund of the company was N18.037 billion in 2013, went down to N16.096 billion at the end of the immediate past financial year as the value depreciated by N1.941 billion which was 10.76 per cent. Its shareholder’s recorded consistence growth in the last five years aside for 2012 when it dropped by N1.020 billion represented 6.11 per cent which was lower than the current 2014 dropped.
Fixed assets in 2013 were N5.671 billion, it dropped by N446 million or 7.86 per cent in 2014 to become N5.225 billion. Its current assets appreciated by N4.668 billion or 6.09 per cent in 2014. In 2013, it was N76.700 billion; it crashed to N81.368 billion in 2014. Total assets in 2013 was N82.372 billion which appreciated by N4.221 billion or some 5.12 per cent in 2014 to stand at N86.593 billion at the end of the year. Profitability The revenue generated in 2014 declined by N31.185 billion representing a decrease of 19.55 per cent. Its revenue has been on upward trend in the last five financial years in terms of percentage year on year apart from 2012.
In 2013, the company’s cost of sales was N142.498 billion which was 89.32 per cent of its revenue and in 2014 it spent 89.26 per cent of its revenue on cost of sales which amounted to N114.563 billion. Gross profit in 2013 was N17.038 billion which was 10.68 per cent of the revenue; it came to N13.789 billion in 2014 represented 10.74 per cent of its revenue.
The company’s gross profit dropped by N3.249 billion or by 19.07 per cent in 2014. Finance costs in 2013 was N2.251 billion, it was N2.307 billion in 2014.
From profit before tax of N4.575 billion in 2013, the company recorded a drop of N3.043 billion in 2014 to stand at N1.532 billion. Despite that it paid lesser tax in 2014 it after tax profit dropped significantly from N3.070 billion in 2013 to N834.421 million in 2014. It made 0.65 per cent of its revenue as profit for the year 2014 compared to 1.92 per cent of revenue it made in 2013 financial year. Liquidity Current ratio in 2013 was 1.30:1, this mean s that current assets of the company can take care of its current liabilities and still have over a quarter of its current assets value. In 2014, the situation was change by dropping to 1.16:1, which mean its current assets can still take care of its current liabilities. The situation presented a decline if its inventory is taking out of the assets. In 2013, it stood at 1.04:1. Its current assets minus stock can take care of its liabilities and still have 4 per cent of its current assets minus inventories left over. In 2014, it stand better with 1.08:1 which means its current assets minus stock can take care of its assets. Score Card There is need for Conoil Plc management to take decisions that can turnaround the profitability of the company.
The current position of the company’s financial statement is not favorable to the shareholders of the company as its earnings per share strongly drop from 442 kobo in 2013 to 120 kobo in the year under review.