…due to cost pressure
Reports has revealed that Total Energies has shown consistent revenue growth over the past five years, with a record-breaking 41% year-on-year growth in 2022 and a notable increase of 38.6% in Q1 of the following year.
Petroleum products account for over 75% of the company’s total revenue, but Total Energies has successfully diversified its operations into areas such as lubricants and solar energy to mitigate potential shocks and reduce reliance on a single product.
Despite the revenue growth, the company has experienced increased costs, which have impacted its profitability.
Total Energies has demonstrated resilience in growing its revenue over the past five years, despite facing various challenges
In the 2022 financial year, the company achieved record revenue of N482.47 billion, with a remarkable 41% year-on-year growth compared to 2021. The company continued its impressive revenue growth trend in Q1, achieving a notable year-on-year revenue increase of 38.6% to N135.28 billion.
This growth was primarily driven by revenue from petroleum products, which accounted for over 75% of the company’s total revenue.
It is positive to note that the company recognized the importance of revenue diversification and has expanded its operations beyond petroleum products into other areas such as lubricants and solar energy.
The contribution from lubricants and other sources has shown consistent growth over time, with an increase from 15.96% in 2018 to approximately 25% in 2022. Revenue diversification is an important strategy to mitigate potential shocks and reduce reliance on a single product or sector and its vulnerability to fluctuations in the petroleum product market.
Despite the revenue growth, the company has also experienced increases in its cost of sales and other operating costs. The high cost of sales, which accounts for well above 86% of total revenue on average, puts pressure on the company’s gross profit margin and overall profitability. This has led to declines in profit before tax and cash flow from operating activities.
Even with the decline in earnings, the company’s commitment to distributing dividends may have been perceived positively by investors, leading to increased confidence in the stock.
The declaration and payment of a final dividend of N21 per share by the company for the 2022 financial year, along with the dividend yield of 6.89%, likely had an impact on investor sentiment.
reductions indicate improved efficiency and potentially positive effects on profitability. The expected increase in profit before tax could help mitigate the negative impact of the revenue decline and attract investor attention.
Ultimately, the impact on Total Energies’ share price will depend on how investors interpret and weigh the revenue decline, cost reductions, and profit growth, as well as broader market conditions and investor sentiment. It is important to note that these are forecasts, and actual results may vary
(Nairametrics)