Mike Adenuga’s Conoil posts 75% profit slump as debt costs rise

CONOIL Plc’s 2025 financial results highlight the growing strain that Nigeria’s elevated interest-rate environment is placing on corporate earnings, with a sharp increase in finance costs wiping out much of the gains from its core operations. This is the compaany’s weakest profit in the last 5 years.

The petroleum marketer, owned by billionaire Mike Adenuga, recorded revenue of N301.72 billion for the year ended December 31, 2025, down 6.6 percent from N323.13 billion in 2024. The decline comes amid shifting dynamics in the downstream oil sector, where marketers have had to contend with changing fuel pricing structures, exchange-rate volatility and intense competition.

Although revenue weakened, Conoil succeeded in reducing its cost of sales by 6 percent to N279.04 billion, helping to preserve profitability at the gross level. However, gross profit still declined 14 percent to N22.68 billion from N26.35 billion, suggesting that margins came under pressure during the year.

One encouraging sign was a substantial reduction in distribution expenses, which fell 41 percent to N4.05 billion from N6.89 billion. This points to improved efficiency in product transportation, logistics and sales operations. Yet these savings were partly offset by a 15.5 percent rise in administrative expenses to N5.32 billion, reflecting the broader inflationary pressures affecting businesses across Nigeria.

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The defining feature of Conoil’s results, however, was the surge in finance costs. Interest expenses soared to N10.78 billion, nearly three times the N3.95 billion recorded in the previous year. The increase amounted to an additional N6.82 billion in financing charges and largely explains the sharp deterioration in earnings.

As a result, profit before tax plunged 75.7 percent to N2.68 billion from N11.004 billion in 2024. Profit after tax fell by a similar magnitude, dropping to N2.18 billion from N8.77 billion.

The figures suggest that Conoil’s challenge in 2025 was not primarily operational performance but the cost of funding its business. Finance costs consumed almost 48 percent of gross profit during the year, compared with just 15 percent in 2024, illustrating how debt-servicing obligations increasingly weighed on earnings.

For shareholders, the impact was severe. Earnings per share dropped to 314 kobo from 1,264 kobo, a decline of more than 75 percent, significantly reducing the profit attributable to each share held.

The results underscore a broader trend among Nigerian companies, particularly in sectors that require substantial working capital such as oil/gas. While deregulation and market reforms have created new opportunities in the downstream petroleum industry, they have also increased funding requirements. Companies relying heavily on bank borrowing are finding that high interest rates can quickly erode profits even when revenues remain relatively stable.

Going forward, investors will be watching whether Conoil can reduce its financing burden, improve margins and capitalise on opportunities in Nigeria’s evolving fuel market. The company’s ability to navigate these challenges may determine whether the steep earnings decline of 2025 proves temporary or signals a more prolonged profitability squeeze.

Economy Post had reported that in a period of 33 months (December 2020 to September 2023), the profits of Conoil Plc grew by 503 percent. However, 50 members of staff lost their jobs within this period.