Seplat Energy Reports 56% Profit Decline, Raises Dividend

Seplat Energy Plc has announced a significant 56% decline in net profit for the third quarter of 2024, reporting earnings of $35.254 million compared to $79.545 million in the same period last year. The drop in profit is attributed to reduced revenue, as detailed in the company’s nine-month financial statements filed on the Nigerian Exchange.

Revenue for the energy company fell to $715.339 million, marking an 11.7% decrease from $810.367 million in the comparable period of 2023. Analysts from CardinalStone noted that this topline weakness is due to Seplat’s overlift position in the previous year, leading to an underlift in the current year.

In terms of gas revenue, Seplat experienced a 4.0% decline, totalling $90.2 million, as an 11.1% year-on-year reduction in production to 103.6 MMscfd overshadowed an increase in gas prices. The company’s cost of sales also decreased by 8.6% year-on-year to $360.3 million, down from $394.075 million in the previous year.

The unaudited financial statement revealed a 14.7% year-on-year decrease in gross profit, which settled at $355.1 million, down from $416.292 million. However, Seplat recorded a remarkable 77.5% increase in operating profit, reaching $274.8 million compared to $154.781 million a year ago. This increase was largely supported by foreign exchange gains of $17.1 million in the first nine months of 2024, a stark contrast to the $27.8 million FX loss reported last year.

Despite facing a high-interest rate environment, Seplat’s net finance costs rose by 4.6% year-on-year to $50.268 million, up from $48.079 million. This increase was primarily driven by a surge in finance costs, which grew by 6.8%, while finance income rose by 24% year-on-year.

Seplat’s profit at the end of the nine-month period is approximately 130% higher than the profit reported in the same period of 2023, with a total profit of $244.957 million compared to $106.536 million last year. However, tax expenses surged by 676.9% year-on-year, reaching $209.73 million, which significantly impacted the profit after tax, leading to a 56% year-on-year drop.

In a positive development, Seplat Energy has increased its quarterly dividend by 20% to 3.6 cents per share, supported by an 11% rise in cash reserves to $433.9 million. The company also reported a reduction in net debt, which decreased to $270 million from $366 million in the previous year. IIF and Kuramo Capital Launch Fund to Support MSME Financing