With N7.6bn loss, Ardova reports worst performance in 6 years

Ardova Plc has reported N7.6billion loss in its unaudited financial statement for the period ended December 31, 2022, becoming one of its worst performance in over six years.

The petroleum marketing company’s worst results continued in 2022 as it had reported N3.85 billion loss in 2021 financial statement.

Ardova also reported N7.14billion loss before tax in 2022 from N2.94billion reported in 2021. 

Despite reporting N240.8billion revenue in 2022 from N201.44billion in 2021, the group reported significant increase in cost of sales, operating expenses and finance cost that plunged its profits to losses.

The fourth quarter 2022 (Q4) unaudited financials reported a loss per share of N2.17 in Q4  2022 (vs loss per share of N3.90 in Q42201), bringing the 2022 loss per share to N5.83 (vs EPS of N2.95 in 2021FY).

 Revenue contracted by 10.9per cent y/y in Q4 2022, primarily due to a decline in the company’s fuel (-20.5per cent y/y) business segment that offset the gains recorded across the Lubricants and greases (+23.4 per cent y/y); Solar system (+144.6per cent y/y); LPG and cylinder sales (+1.3 per cent y/y); and Haulage and transportation services (+1,405.3per cent y/y) product lines.

Meanwhile, on a q/q basis, revenue grew slightly by 4.1per cent following a 16.6per cent q/q increase in the lubricants and greases (16.6 per cent q/q) segment.

Gross margin turned positive as it came in at 7.2per cent for the quarter (Q42021: -0.5 per cent), as cost of sales margin reduced to 92.8 per cent (Q42021: 100.5per cent).

Notwithstanding, Ardova’s operating margin remained negative at -0.8% (Q42021: -3.4per cent) amid a 136.1per cent y/y increase in operating expenses.

 Net finance costs declined by 45.1per cent y/y to N1.42 billion (Q4 2021: N2.59 billion), primarily due to a 45.1per cent y/y fall in finance cost, and a 194.9 per cent y/y growth in finance income.

The lower finance costs outturn reflects the zero-balance recorded on net exchange difference on borrowings (Q32021: N1.50 billion).

 Overall, the company recorded a loss before tax of N2.83 billion, representing a 40.7per cent y/y decline from the N4.77 billion recorded in Q4 2021.

Accordingly, loss after tax settled at N2.83 billion (vs loss after tax of N5.10 billion in Q42021) in the absence of any income tax expenses for the period.

Analysts at Cordros research said: “Ardova’s Q4-22 performance remained unimpressive, underscoring the marketers’ struggle for positive earnings since Q2-22.

“Considering the operating headwinds in the downstream oil and gas space amid elevated inflationary pressures, we remain pessimistic about Ardova’s ability to turn the tide in Q4-22. Our estimates are under review.