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TOTAL Q2'20: COVID-19 Disruptions Weigh On Earnings
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TOTAL Q2'20: COVID-19 Disruptions Weigh On Earnings
Cardinalstone Research

Total Nigeria Plc (NGSE: TOTAL) reported N373.9 million loss in its unaudited Q2’20 results (vs N604.1 million profit in Q2’19). This result also leaves cumulative losses at N537 million (c.53.1% of our full-year forecast) for the first six months of 2020. 
 
Key highlights:
  • In Q2’20, revenue declined by 50.3% YoY to N 36.5 billion, driven by weaknesses across product lines. Revenues from petroleum products (AGO, PMS, and ATK) contracted by 55.7% YoY while Lubricants sales dipped by 26.7% YoY to N9.9 billion. We believe the revenue weaknesses may have mirrored the fall in fuel demand that was stoked by the imposition of strict lockdown measures in Lagos, Abuja and Kano. Notably, and in line with our expectation, aviation sales (-83.0% YoY) suffered a significant contraction following the restriction of air travels
 
  • Gross margin improved by 1.0 ppts to 12.7%, following a c.53.0% YoY plunge in the crude oil price (to c.$31.1/bbl in Q2’19) that may have supported margins of deregulated products
 
  • TOTAL reported a net finance income of N1.3 billion in Q2’20 compared to the net finance expense of N1.9 billion in the corresponding quarter of 2019. Notably, finance income (22x YoY) received a boost from the N2.1 billion payment of legacy subsidy receivables from the Petroleum Support Fund (PSF). On the other hand, finance costs declined by 76.1% YoY to N830.3 million due to deleveraging efforts and moderation in yields. The company's borrowings stood at N31.0 billion in Q2'20 (vs N39.9 billion in FY’19)
  
  • Net cash balance stood at negative N19.6 billion at the end of the quarter, compared to negative N41.8 billion a year ago

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