MRS Reports Strong Q2-2024 Earnings With N3.411 Billion Pre-Tax Profit

MRS Reports Strong Q2-2024 Earnings With N3.411 Billion Pre-Tax Profit

MRS Oil Nigeria Plc has reported a pre-tax profit of N3.411 billion for the Q2 ended June 30, 2024, representing 190.96% year-on-year (YoY) increase.

According to the company’s Q2 2024 financial statements, MRS Oil reported impressive revenue of N82.813 billion, marking a 186.94% year-on-year increase from the N28.880 billion recorded the previous year and a 4.62% rise compared to Q1 2024.

This brings the half-year revenue to N161.973 billion, which is more than 80% of the company’s total revenue for the full year 2023.

Key highlights (Q2 2024 vs Q2 2023)

• Revenue: N82.813 billion +186.94% YoY
• Cost of sales: N76.265 billion +220.96% YoY

• Gross profit: N6.548 billion +28.42% YoY

• Impairment loss on financial assets: N962 million +92.61% YoY

• Admin/Selling & Distribution Expenses: N2.300 billion +91.87% YoY

• Net Foreign exchange loss: N209 million -90.81% YoY

• Operating profit: N3.351 billion +187.00% YoY

• Net Finance income: N59.61 million +1,196% YoY

• Profit after tax: N2.228 billion +166.70% YoY
• Earnings per share: N6.50 +166.39% YoY
• Total Assets: N65.083 billion +18.70%

Commentary

• Revenue from premium motor spirit (PMS) remains a major driver for the company’s total revenue, constituting over 80% of the total.

• Despite the significant revenue increase, the rising cost of sales has outpaced revenue growth, leading to moderated gross profit growth and a shrinking margin. In Q2 2024, the gross profit margin fell by 55.25% YoY to 7.91%.
• This indicates that the company is facing challenges with rising costs, resulting in reduced profitability. It highlights the need for effective cost management to maintain profit margins and overall financial performance.

Overall, the company performed better in Q2 2024 across key performance indicators compared to Q1 2024.  The company has set an ambitious revenue forecast of N170.340 billion for Q3, surpassing the half-year 2024 actual revenue by more than 5%.

However, adopting a cautious and conservative approach, the company has projected increased costs of sales and overheads, resulting in a moderate profit before tax of N1.08 billion for Q3 2024, which is lower than the previous quarters of the year.

Nevertheless, considering the strong performance in the first half of 2024 and the conservative Q3 forecast, it is highly plausible that MRS Oil Nigeria Plc will surpass its full-year 2023 pre-tax profit.

This can enhance investor confidence and potentially lead to increased interest and investment in the company.

This year, the share price has gained 26.33% in contrast to the 644.65% YtD gain in 2023.