Total Nigeria Falls to Three-Year Low on Profit Concern

Total Nigeria Plc, which distributes and markets fuel and petroleum products, fell to its lowest price in almost three years on concern profit growth will trail other industries as demand wanes, Vetiva Capital Management said.

The stock fell 5 percent, the daily limit, to 125.41 naira, the lowest since August 2009, by the close in Lagos.

“Investors who hold positions on that stock may have decided to sell to seek more lucrative returns in other attractive sectors,” Pabina Yinkere, head of research at Vetiva, said by phone from Lagos today. “It will take some time for petrol demand to ramp up to where it was.”

The government raised the price of gasoline on Jan. 1 to 97 naira a liter from 65 naira, saying the move was necessary to end a subsidy on local consumption that was costing about 1.7 trillion naira a year. Government’s initial effort to double the price was resisted by labor and civil society organizations that organized a nationwide strike. Despite this, the government says the price will be raised further.

Only oil companies that are “well-diversified” can still show growth, according to Yinkere. “But for those that are purely in petrol marketing, the outlook is not great,” he said. Total is not one of the diversified oil marketing companies in Nigeria, he said.

Total Nigeria forecast profit of 1.8 billion naira ($293 million) for the nine months through September on revenue of 54.5 billion naira, according to a statement by the Lagos-based unit of Total SA (FP) published on the Nigerian Stock Exchange website June 11.

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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