By Josiah Nkemakolam
A sharp increase in Conoil Plc’s finance costs overshadowed resilient sales performance in 2025, dragging profit after tax down by about 75 per cent and reducing earnings per share, even as the company maintained its dividend payout and significantly expanded its asset base.
The company’s audited financial statements for the year ended December 31, 2025, showed that revenue remained above the N300 billion mark, although it declined moderately from the previous year, while aggressive investment in property, plant and equipment and higher borrowings reshaped its balance sheet.
Revenue for the 2025 financial year stood at N301.72 billion, compared with N323.13 billion recorded in 2024, representing a decline of approximately 6.6 per cent. Although turnover remained substantially higher than historical levels, rising costs and financing expenses substantially eroded profitability.
Cost of sales fell to N279.04 billion from N296.77 billion, allowing the company to post a gross profit of N22.68 billion, compared with N26.35 billion in the preceding year.
However, operating expenses and financing costs proved to be the defining factors of the year’s performance.
Distribution expenses declined significantly to N4.05 billion, from N6.89 billion in 2024, reflecting tighter cost management in sales and logistics activities. Administrative expenses, however, increased to N5.32 billion, compared with N4.60 billion in the previous year.
The most significant pressure came from finance costs, which surged dramatically to N10.78 billion, almost three times the N3.95 billion recorded in 2024. The steep rise in borrowing costs substantially reduced earnings before tax despite the company’s continued ability to generate strong revenue.
Consequently, profit before tax fell sharply to N2.68 billion from N11.00 billion, while income tax expense declined correspondingly to N499.17 million, compared with N2.23 billion a year earlier.
Profit after tax dropped to N2.18 billion in 2025 from N8.77 billion in 2024, representing a year-on-year decline of roughly 75 per cent.
The company reported total comprehensive income of N2.18 billion, with no other comprehensive income recorded during the year.
The decline in profitability was equally reflected in shareholders’ returns.
Basic and diluted earnings per share both fell to 314 kobo, down from 1,264 kobo in 2024, indicating a substantial reduction in earnings attributable to each ordinary share.
Despite weaker earnings, the company maintained its dividend policy by paying shareholders a dividend of 200 kobo per share for the 2025 financial year. The dividend was lower than the 350 kobo paid in both 2023 and 2024 but remained consistent with the company’s commitment to rewarding shareholders while preserving capital amid a more challenging operating environment.
A review of the company’s five-year financial performance illustrates remarkable growth in revenue over the period despite fluctuations in profitability.
Revenue expanded from N126.73 billion in 2021 to N131.42 billion in 2022 before surging to N201.39 billion in 2023. Sales climbed further to a record N323.13 billion in 2024 before moderating to N301.72 billion in 2025.
Profitability also followed a generally upward trajectory before reversing sharply in 2025.
Profit before tax stood at N3.83 billion in 2021 and improved to N6.13 billion in 2022. It climbed further to N12.28 billion in 2023 before easing slightly to N11.00 billion in 2024. The sharp increase in finance costs during 2025, however, reduced pre-tax earnings to N2.68 billion.
Similarly, profit after tax rose steadily from N3.08 billion in 2021 to N4.96 billion in 2022 and almost doubled to N9.87 billion in 2023. Profit moderated slightly to N8.77 billion in 2024 before falling sharply to N2.18 billion in 2025.
Earnings per share reflected the same trend. Shareholders earned 444 kobo per share in 2021, 714 kobo in 2022, 1,422 kobo in 2023 and 1,264 kobo in 2024 before earnings declined to 314 kobo in 2025.
Dividend history showed a gradual enhancement in shareholder distributions over the years. Investors received 250 kobo per share in both 2021 and 2022, rising to 350 kobo in 2023 and remaining unchanged in 2024 before reducing to 200 kobo for the 2025 financial year.
The statement of financial position revealed that the company significantly strengthened its asset base despite the weaker earnings performance.
Total assets increased to N139.37 billion at the end of 2025 from N114.95 billion in 2024. The growth was driven largely by a substantial increase in investment in property, plant and equipment, which more than doubled to N10.81 billion, compared with N3.97 billion in the preceding year.
Current assets also expanded to N126.04 billion from N108.47 billion, supported mainly by higher trade receivables and stronger cash balances.
Trade and other receivables rose significantly to N90.59 billion, from N71.90 billion, while cash and bank balances improved to N12.91 billion, compared with N7.26 billion recorded at the end of 2024.
Inventory levels declined to N22.39 billion from N29.25 billion, suggesting improved stock management and stronger inventory turnover during the year.
On the liabilities side, borrowings increased sharply to N54.90 billion, compared with N28.68 billion in 2024, explaining the steep rise in finance costs that ultimately weighed on profitability.
Total current liabilities rose to N98.98 billion, while total liabilities increased to N100.13 billion, from N75.46 billion a year earlier.
Shareholders’ equity remained broadly stable at N39.24 billion, compared with N39.49 billion in 2024, as retained earnings declined following dividend payments and lower annual profit.
The cash flow statement painted a more cautious picture of liquidity.
Net cash generated from operating activities fell sharply to N269.62 million, from N8.80 billion in 2024, reflecting weaker operating cash generation alongside increased working capital requirements.
The company invested N7.65 billion in property, plant and equipment during the year, more than double the prior year’s capital expenditure of N3.16 billion, signalling continued expansion and capacity enhancement despite earnings pressure.
Financing activities consumed N13.21 billion, comprising N10.78 billion in interest payments and N2.43 billion in dividend distributions.
Overall, the company ended 2025 with a substantially weaker profit profile but a considerably larger asset base. The results underline the impact of Nigeria’s high interest-rate environment, where elevated borrowing costs significantly diluted earnings despite sustained revenues exceeding N300 billion and continued investment in long-term productive assets.
Going forward, the company’s financial performance will likely depend on its ability to translate recent capital investments into stronger operating cash flows while reducing reliance on expensive borrowings. A moderation in finance costs, combined with sustained revenue growth and improved working capital efficiency, could help restore profitability and strengthen shareholder returns in subsequent financial years.