Eterna Profit Slows To 35.4%, Amid Rising Costs, Offers N0.40 Dividend

The board of Eterna Plc recently presented its audited financials for the year ended December 31, 2017 showing that revenue grew at a faster pace than profit, as cost of sales ballooned by 69.54%, just as selling and distribution expenses as well as general administration expenses increased by 48% each.
Revenue for the period rose by 61.88% to N173.03bn from N106.887bn; cost of sales increased to N166.692bn an increase by 69.54% from the previous year’s N98.319bn, with material cost accounting for N166.282bn from N97.801bn; and delivery cost, N410.746m from N517.767m in 2016; resulting in gross profit of N6.337bn, a 26.04% drop from prior year’s N8.568bn.
A breakdown of the revenue showed that oil trading (being the bulk importation and sales directly to customers facilities or offshore distribution of white products, baseoils, bitumen, low pour fuel oil as well as lifting and sales of crude oil) fetched the bulk of N110.835bn, as against the N48.274bn in 2016; followed by the N56.214bn from retail and industrial, compared to N54.026bn; while lubricants and chemicals N5.979bn, up from N4.586bn. Trading was also the biggest contributor to the cost of sales at N110.003bn; followed by N52.214bn from retail and industrial; while N4.203bn; leaving gross profit of N3.729bn from retail and industrial; with N1.776bn from lubricants and chemicals; and just N831.85m from trading.
Selling and distribution expenses rose to N73.431bn from N49.506bn, helped by the N67.29bn in marketing and sales commission, which rose from N48.449bn; and sampling and analysis expenses that gulped N6.141bn from N1.057bn; just as general administrative expenses climbed from N2.094bn to N3.1bn, boosted by the N802.038m, compared to N259,000 in 2016; N553.214m went into staff costs that rose from N524.257m; and depreciation worth N380.996, from N340.015m, among others.
Other income however fell 68.75% to N29.638m, compared to N94.84m; foreign exchange gains fell by 94.72%, an even more significant margin to N13.585m from N257.377m.
With no derivative loss for the period, as against N948.225m, operating profit fell from N5.828bn to N3.206bn, representing a 44.98% drop.
Finance income notched 36.94% to N142.457m from N104.029m; while finance cost was contained by 84.83% to N535.882m, up from N3.531bn. The finance cost comprised N334.037m, from the previous N288.426m; even as interest and other financial charges (being interest charges on various short-term loans, overdrafts and trade finances) dropped to N174.115m from N3.224bn.
Profit before tax for the period could therefore only rise by 17.2% at N2.812bn from N2.4bn in the corresponding full year of 2016, while a 12.09% drop in tax from N922.613m to N811.039m left profit after tax at N2.001bn, which was 35.49% better than the previous N1.477bn.
Retail and industrial contributed N1.178bn to the net profit for the year, from N1.079bn; followed by N561.054m from lubricants and chemicals, compared with N233.736m, and N262.776m from trading, as against N164.715m. Total comprehensive income for the year stood at N1.98bn, up from N1.469bn, translating to Earnings Per Share of N1.54, as against the previous N1.13 each.
From this, directors of Eterna are recommended a dividend of 40 kobo, up from 30 kobo in 2016, for approval by the shareholders when then gather on June 19, 2018. Payment date is fixed for June 20, to those whose names appear on the register of members when it closes from May 24 to 28.