Following a significant pushback in trading activities (crude lifting), ETERNA’s topline contracted by 74.39% YoY, to hit a 5-year low of NGN58.72bn for 2020FY (vs. NGN229.27bn in 2019FY). Revenue from the trading segment (now contributing 2% to total revenue from 72% in 2019FY) declined by 99.37% YoY, on account of the company’s decision to amend its crude lifting contract with clients. During the year, ETERNA acted as an agent to transactions, receiving commission as revenue. From our assessment, we suspect the drop in crude oil demand alongside FX risk, would have initiated this new policy. Nevertheless, ETERNA still recorded a significant FX loss of NGN354.06mn in 2020FY, compared to gain of NGN33.25mn realized in the previous year. Similarly, Fuel and Lubricant sales dipped by 15.46% YoY and 16.75% YoY respectively, in contrast to the growth (Fuel: 5.43% YoY and Lubricant: 54.77% YoY) reported in 2019FY. Both segments suffered decline in sales volume, stemming from movement restrictions ensuing from the pandemic, as well as the company’s low retail presence (less than 30 stations nationwide). With the fuel segment now accounting for 77% of total revenue, management would need to expand its retail presence to spur topline growth going forward. Given this backdrop, we expect the fuel segment to drive revenue growth in the coming year (supported by price and volume increase) – as we envisage that the new trading policy would continue. Hence, topline is projected to grow by 19.80%YoY to NGN70.34bn for 2021FY
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