TotalEnergies’ Nigeria Q2 lube profit up

TotalEnergies Marketing Nigeria (TMN) saw profit from its lube operations rise in the second quarter of the year, contrasting with other local blenders’ lower profits during the same period.

Its lube operations’ gross profit of 9.20bn Nigerian Naira ($21.9mn) in the three months to end-June rose by 26pc from the same period a year earlier.

Profit fell slightly from N9.43bn in the first three months of the year.

Profit rose on the back of an even larger 47pc rise in sales to their highest in almost three years.

Other local blenders’ sales similarly rose strongly in the second quarter. But their profit fell because higher costs outpaced the rise in sales.

The surge in costs reflected a combination of factors including higher base oils prices and freight costs.

The depreciation of the Nigerian currency over the past year magnified the rise in costs. Nigerian blenders procure all their base oils feedstock for their lube plants from overseas markets.

TMN’s costs similarly outpaced sales in the second quarter, rising 59pc. The pace of the increase was 11 percentage points higher than the rise in sales.

Other local blenders’ costs rose much more steeply than sales.

With costs rising faster than sales, TMN’s gross profit margin of 29.3pc in the second quarter fell from 34.3pc during the same period a year earlier.

But the size of the drop in profit margin was smaller than for other local blenders.

TMN operates a 40,000 t/yr lube blending plant in Lagos and a 24,000 t/yr plant in Koko.