Conoil Nigeria Plc posted a sharp drop in earnings for the 2025 financial year, as a steep rise in finance costs overwhelmed operating income and erased much of the company’s profitability, according to unaudited results released for the year ended December 31, 2025.
Profit before tax fell 77.03% to N2.53 billion, down from N11.00 billion a year earlier, marking one of the weakest earnings performances by the oil marketer in recent years. Profit after tax declined by a similar margin to N2.01 billion, while earnings per share slid to N2.90 from N12.64 in the previous year.
The results highlight the growing strain of higher leverage and borrowing costs on corporate earnings in Nigeria’s energy distribution sector, even as companies expand assets and operations. For Conoil, a surge in finance expenses more than offset modest cost savings and stable operating income, underscoring the vulnerability of margins in a high-interest rate environment.
Revenue for the year fell 6.62% to N301.72 billion, reflecting softer sales volumes and pricing pressures. Cost of sales declined at a slower pace of 6.05% to N278.81 billion, resulting in a 13.06% drop in gross profit to N22.91 billion. Gross margin narrowed as input costs and operational inefficiencies weighed on performance.
Operating profit declined by 13.73% to N12.90 billion, despite reductions in selling and distribution expenses. While management efforts to contain operating costs provided some relief, they were insufficient to counter the combined impact of weaker revenue and rising financing obligations.
The most significant drag on earnings came from finance costs, which jumped 162.46% year on year to N10.38 billion, compared with N3.95 billion in 2024. The sharp increase reflects both higher borrowings and elevated interest rates, a trend that has affected many Nigerian corporates reliant on debt financing.
As a result, much of the company’s operating income was absorbed by interest expenses, leaving a thin margin before tax and sharply lower returns for shareholders. The company’s debt-to-equity ratio rose to 138.8% from 72.6% a year earlier, highlighting the growing role of leverage in its capital structure.
Despite the earnings slump, Conoil reported strong balance sheet expansion during the year, driven largely by increased borrowing and investment in fixed assets. Total assets rose 20.93% to N139.01 billion, supported by growth in cash holdings, receivables, and property, plant and equipment.
Property, plant and equipment increased by 150.73% to N9.96 billion, reflecting significant capital expenditure during the period. Cash and cash equivalents rose 79.03% to N13.00 billion, providing some liquidity buffer despite the heavier debt burden.
Trade and other receivables climbed 27.48% to N91.66 billion, indicating higher credit exposure to customers. While this supports revenue generation, it also raises questions around working capital efficiency and cash flow management in a tightening financial environment.
Total liabilities increased by 32.44% to N99.94 billion, driven primarily by an 89.17% surge in borrowings to N54.24 billion. The increase in debt underlines the company’s reliance on external financing to support operations and asset growth, a strategy that has become more costly as interest rates rise.
Shareholders’ equity edged down slightly by 1.06% to N39.07 billion, reflecting the sharp fall in retained earnings. The marginal decline suggests that while the company preserved capital, it did so at the cost of significantly reduced profitability.
Market reaction to the results has been muted but cautious. Conoil’s shares have underperformed the broader Nigerian Exchange so far in 2026, as investors weigh the company’s expanding asset base against the risks posed by higher leverage and shrinking margins.
The stock closed at N169.00 per share on Thursday, February 5, 2026, broadly flat on the day. It opened the year at N187.20 and has since fallen 9.72% year to date, reflecting concerns over earnings sustainability.
Over the past three months, the shares traded 2.75 million units across 6,123 deals, with a total value of N468 million. Trading activity suggests steady investor interest, though sentiment remains cautious amid uncertainty over future profitability.
Analysts note that Conoil’s performance mirrors broader challenges in the downstream oil sector, where volatile demand, cost pressures, and high financing costs are squeezing margins. While asset expansion may position the company for long-term growth, the immediate impact of rising interest expenses poses a clear risk.
Looking ahead, the key question for investors is whether Conoil can rebalance its capital structure, improve operating efficiency, and stabilise earnings in a challenging macroeconomic environment. Without a moderation in finance costs or a meaningful improvement in operating margins, profitability is likely to remain under pressure.
For now, the 2025 results underscore a difficult trade-off facing the company: growth funded by debt has expanded its balance sheet, but at a cost that has sharply reduced earnings and weighed on investor confidence.