11 Plc 9M’19 – Sustained cost pressures drag EPS lower

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11 Plc 9M'19 - Sustained cost pressures drag EPS lower11 Plc 9M'19 - Sustained cost pressures drag EPS lower
CardinalStone Research
11 Plc (MOBIL: TP 181.24 – HOLD) released its 9M’19 result, which revealed a 19.4% YoY plunge in EPS to N17.59 despite a 13.2% YoY growth in sales. The decline in EPS was largely due to input cost pressures (+15.8% YoY) and lower rental income (-14.6%).
Some positives:
  • We note the strong growth in turnover in Q3’19 (+24.5% YoY) which was driven by improved volumes in the fuel segment. Recall that in FY’18, the company broadened the scope of its fuel business with the re-addition of both LPG and LTK to its product portfolio. This may have resulted in the strong top-line growth in the review period.
  • Operating efficiency improved in the quarter under review amid a 90bps decline in opex to sales ratio. We believe this is impressive in the context of Nigeria’s double digit inflation environment.
  • Operating cash flows improved to N16.0 billion in 9M’19 from N8.7 billion in H1’19. The increase in operating cash flows was largely supported by improved working capital management notably on the inventory front.
Some concerns:
  • We highlight MOBIL’s struggles to shrug off the impact of a reported increase in PMS depot price to ₦117/litre in May 2018 from ₦111/litre previously. Gross margin declined to 8.0% in Q3’19 from 8.7% in Q3’18.
  • Rental and other operating income declined by 25.5% YoY to N2.0 billion during the review period.
  • Overall, Q3’19 earnings weakened by 10.4% to N2.2 billion.
Read Also:  The Nigerian Sugar Industry Analysis: Local consumption continues to outweigh production

11 Plc 9M'19 - Sustained cost pressures drag EPS lower 11 Plc 9M'19 - Sustained cost pressures drag EPS lower

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11 Plc 9M'19 - Sustained cost pressures drag EPS lower11 Plc 9M'19 - Sustained cost pressures drag EPS lower

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