Event: Total Nigeria (Total) reports Q3 2017 results
Implications: Cuts to consensus 2017E estimates expected
Positives: Strong other income result
Negatives: Sales, PBT and PAT all declined by -9% y/y, -42% y/y and -50% y/y respectively
This afternoon, Total Nigeria (Total) reported Q3 2017 results which showed declines across all key P&L line items. While sales of N68.3bn declined -9% y/y, PBT and PAT of N2.4bn and N1.3bn both declined by -42% y/y and -50% y/y respectively. These y/y declines are unsurprising given the strength of Total’s Q3 2016 performance, a period the firm, as well as other major marketers, benefitted from the FG’s fx preferential treatment. The topline decline was driven by a double-digit y/y fall in sales to N50.8bn at service stations. This, along with a gross margin contraction of -726bp y/y, more than offset positives coming through from a much improved other income line. Other income was buoyed by fx-related gains of N2.6bn. Sequentially, the trend was similar to the y/y ones, with declines across all key lines. While sales declined -6% q/q, both PBT and PAT were down -23% q/q and -30% q/q respectively. Total proposed a N3.00 interim dividend, ahead of our N2.00 estimate; it implies a yield of around 1%.
Compared with our estimates, both sales and PBT were in line with our forecasts. However, PAT came in 16% behind our N1.6bn estimate due to a higher tax rate of 43% compared with 32% that we were modelling. On an annualised basis, Total’s 9M 2017 PBT is tracking behind consensus’ N15.1bn forecast. As such, we expect downward revisions to consensus 2017E estimates. Year to date, Total shares have declined -18%, underperforming the NSE ASI by c.50%. We rate the stock Neutral.
Total Nigeria Q3 2017 results: actual vs. FBNQuest Research estimates (N millions)