Nigeria Conoil’s Q2 lube profit falls

Nigerian oil products marketer Conoil saw profit from its lubricant unit fall in the second quarter of the year as costs continued to outpace sales.

The lube unit’s gross profit of 369.97mn Nigerian Naira ($888,500) in the three months to end-June fell by 68pc from the same period a year earlier.

Profit was up 33pc from the first quarter as sales rose faster than costs.

The firmer profit versus the first three months of the year partly reflected the unusually low level that it has fallen to since the fourth quarter of last year.

The country’s currency was also relatively steady in the second quarter compared with the first three months of the year.

Profit fell from year-earlier levels as a 42pc rise in sales in the second quarter lagged costs that more than doubled.

The higher costs reflected a combination of high prices for imported base oil supplies and the deprecation of Nigeria’s currency versus the US dollar over the past year.

Prices for imported base oils shipments have risen because of unexpectedly tight supply in Europe. At the same time, fewer sellers have been willing to line up shipments of Russian origin to move to Nigeria.

More base oil supplies from the US have instead moved to Nigeria in recent months.

The rise in costs squeezed the lube unit’s gross profit margin to 13.1pc in the second quarter. The margin was down from 57.7pc during the same period a year earlier and from more typical levels of more than 25pc in recent years.

The lower profit cut the lube unit’s share of Conoil’s total gross profit to less than 10pc for a third straight quarter. Its share of total gross profit had averaged at least 17pc during the previous three years to 2021.