A Review of the Nigerian Energy Industry

Conoil sustains competitive edge via robust expansion

15 October 2014, Lagos – The operating environment has been challenging for companies given the poor state of infrastructure and high cost of doing business.  Consequently, companies employ various strategies to survive and deliver impressive returns to shareholders. Conoil Plc, which is one the leading petroleum marketing firms introduced strategies aimed at remaining a leading force in the industry.
One of such strategies was a four-year expansion plan. At the beginning of 2013, company launched the second phase of  the  expansion plan  with the inauguration of new ultra-modern retail outlets spread across the country.

Conoil had earmarked about N4.8 billion for the project which is targeted to grow the company’s sales and revenue by over 65 per cent.
Conoil embarked on the plan to adequately prepare for industry-specific challenges, ensure impressive growth in its performance indicators and consolidate its leadership position in the downstream petroleum business.

Capacity Upgrade
In pursuant of this, the company increased the storage tanks for white products – Premium Motor Spirit (PMS), diesel and kerosene – to 80,000 metric tonne, to double the capacity of its storage facilities at its Apapa installation.
Another major plank of the expansion programme was the construction of the company’s multi-billion naira Port Harcourt, Rivers State, depot which has the capacity to hold 70,000 metric tonne of various petroleum products with the propensity to dispense 5.5 million litres per day. The Port Harcourt depot complements the company’s flagship installation in Apapa, Lagos, providing easy access to fuel imports and easing the pressure on available jetties and other port infrastructures in Lagos.
Conoil   also committed substantial investments to upgrade and expand its lubricant blending plants at its depots at Apapa, Lagos, Port Harcourt and Kano with a view to meeting and surpassing customers’ ever increasing demand for its quality engine oil.
The company’s lubricant business received a major boost during 2014 financial year under review, when it was admitted into the ECOWAS Trade Liberalisation Scheme (ETLS), which afforded the company the opportunity to export its high grade, proudly made in Nigeria motor engine oils to established markets in the sub-region duty free. The ETLS was adopted by ECOWAS member states to eliminate trade barriers and facilitate trade integration, improve the foreign exchange earnings of companies of member states and create more jobs in their respective countries.
Also, the company, through innovation in the production and distribution of Liquefied Petroleum Gas (LPG) from the state-of-the-art LPG bottling plant located in Ikeja, Lagos, launched itself as a leader in the provision of services that are of world-class standards to consumers.

Financial Position
Conoil’s current full year results showed that the company maintained its leadership position in the industry, reaping bountifully from the huge investments in its business portfolios.
Revenue grew by 6.4 per cent to reach N159.54 billion as against N149.99 billion posted in 2012. Gross Profit shot up to N17.04 billion, which represents over five  per cent rise above the previous year’s.  However,  profit before tax (PBT) jumped by  289 per cent from N1.15 billion in 2012 to N4.58 billion, while it recorded profit after tax (PAT) of N3.07 billion, which indicated an increase of  330 per cent  above the 2012 performance.

The report also showed a stronger balance sheet as retained earnings boosted shareholders’ funds to N18.04 billion in 2013 compared with N15.66 billion in 2012. The company also improved its profit margin, showing efficiency in resources management. Its PBT margin improved from 0.77 per cent in 2012 to 2.87 in 2013,while PAT margin stood at 1.92 in 2013,up from 0.48 per cent in 2012.
Reward for Shareholders
The board of directors recommended a dividend of  N2.78 billion to shareholders. The dividend pay-out, which represents 300 per cent increase over the N1.00 on every 50 kobo ordinary share paid in the previous year, is a corollary of the strong performance posted by the company during the financial year in review.  Net earnings per share (EPS) which measures the net income for every shareholder, also rose by 329 per cent, from 103 kobo to 442 kobo.
Commenting on the results and dividend at company’s 44th annual general meeting held on in Uyo, Akwa Ibom State, shareholders  unanimously commended the board and management for faithfully implementing the strategies and programmes that enabled the company record impressive performance across board.
“We are impressed with the record performance and the balance sheet. We are indeed happy that Conoil is paying quality dividend amid the tough challenges facing downstream operators in this country. It shows that the board and management of the company hold every shareholder in high esteem,” National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, said.
Speaking in the same vein, President of Nigeria Shareholders Solidarity Association (NSSA), Chief Timothy Adesiyan said, “I am particularly pleased that the board kept to the promise made at the last meeting to boost bottom-line and ensure adequate returns on investment for shareholders. The revenue and profit growth compared favourably with industry performance. We can only wish that they continue to strengthen and consolidate on the company’s leadership position in the industry.”
The Chairman, Ibadan Zone Shareholders’ Association, Chief Sola Abodunrin, commended the company for ensuring that the shareholders earned returns on their investments.
“The 400 kobo dividend represents over 300 per cent increase over we were paid last year. It goes to show Conoil’s commitment to its shareholders,” Abodunrin said.
Chairman’s comments
In his report to shareholders at the AGM, Chairman, Conoil Plc,  Mike Adenuga (Jnr), said the company had consolidated its competitiveness in the different segments of the business.
“We also pursued and sustained strategic expansion of our retail network across the length and breadth of the country with a view to ensuring that a lot more people, especially in the remotest parts of the country, have access to our superior products and services.”
While assuring the shareholders that Conoil is equipped with all the essential materials, intellectual and human resources, to surmount the challenges ahead in the downstream petroleum sector, Adenuga stated that the company has been positioned to take full advantage of opportunities that could arise from the Federal government’s economic reforms, by leveraging on the solid base built over the years.
“Greater attention will be devoted to cutting operational costs in the different segments of the business, while still maintaining and improving on the quality of our products and services. With renewed commitment, we will explore developing and emerging markets, even as we continue to build on our strengths in areas where we perform well, with good growth and profitability,” Adenuga added.





– Goddy Egene, This Day

In this article

Join the Conversation