Despite TotalEnergies $21.4bn Profit, Nigerian Subsidiary Struggling With Huge Expenses

Total Energies SE is celebrating a historic $21.4bn (N30.3tn) profit in full-year 2023, but the Nigerian subsidiary is struggling with expenses that dragged its profit down by 20 per cent.

After heavy investments in crude, liquefied natural gas (LNG) and power divisions amounting to $16.8bn (N23.8tn), the French conglomerate achieved revenue of $218.9bn (N310tn).

Though total revenues were down by 17 per cent compared to the $263.2bn (N373.1tn) posted in the previous year, the conglomerate was able to cut its ‘other operating’ and ‘other expenses’ by 11.5 per cent from a combined $37.1bn (N52.6tn) in 2022 to $32.8bn (N45.4tn) in 2023.

This aided TotalEnergies SE’s surge in net profit in 2023. In 2022, the group’s profit was $20.5bn (N29tn).

Unlike the conglomerate, TotalEnergies Marketing Nigeria Plc saw a 32 per cent revenue growth of N635.95bn ($448.5m at a weighted average of N1417.6/$) in 2023, up from N482.5bn ($340.3m) in the previous year but its profit was cut by surging expenses.

Total Nigeria posted a dip in net profit of N12.9bn ($9.1m) from the N16.1bn declared in 2022, down by 20 per cent despite improved revenue.

The fall in profit was underpinned by other expenses broken down as foreign exchange loss of N11.5bn ($8.1m), selling and distribution cost of N6.7bn ($4.7m) and N44.4bn ($31.3m) incurred on administrative expenses.

In total, the Nigerian subsidiary spent N62.6bn ($44.2m) on ‘other expenses, selling and distribution and administrative expenses’ last year which is 73.8 per cent surge compared to N36bn ($25.4m) spent in 2022.

Nigeria’s foreign exchange policy of a managed float introduced in June 2023, which led to the depreciation of the naira, was responsible for the N11.5bn ($11.1m) forex loss recognised in the books of Total.

When the Central Bank of Nigeria introduced the ‘Willing Buyer, Willing Seller Model’ on June 14, 2023, the naira moved from N463 per dollar, exchanged June 9 to N632.27 on June 14.

The currency fell further to N746.39 per dollar in Jully, N942.1 per dollar in November and N899.4 per dollar on December 29, 2023.

TotalEnergies Nigeria did not propose dividends to shareholders in 2023, unlike the parent company that proposed an ordinary dividend increase of 7.1 per cent.