Oil company, Eterna Plc, has released its revenue and other financial forecast for the fourth quarter of this year. The company disclosed that it is expecting a revenue of NGN60.8 billion for the fourth quarter of 2020, a period Nigeria is expected to be battling recession.
In the corresponding quarter of 2019, Eterna Oil reported NGN229.4 billion revenue, and this year, Eterna Oil is projecting NGN60.8 billion as revenue. The company also estimated that its cost of sales or production will hit NGN55.3 billion in the last three months of 2020. Last year Q4, Eterna Oil reported that its cost of sales reached NGN224.5 billion.
Meanwhile, the gross profit will hit NGN5.4 billion in the fourth quarter of 2020, due to the estimated cost of sales when compared to the projected revenue. In its financial statement for 2019 fourth quarter, the company recorded NGN4.8 billion; this projects that Eterna Oil's gross profit will surpass that of 2019 Q4.
Also, in the projected earnings statement, AllNews gathered that Eternal Oil is expecting NGN358.3 million as Profit before tax in the fourth quarter of this year, surpassing the NGN125.7 million it reported in the corresponding period of 2019. While Profit after tax is projected to hit NGN243.7 million in Q4 2020; also higher than the 85.5 million it reported in its Q4 financials last year.
This year has been a disappointing period for oil companies in Nigeria following the crash of oil price. The oil price war between Saudi Arabia and Russia had first crashed the oil price when both countries flooded the market with more oil than demanded for. After the end of the oil price war between Saudi Arabia and Russia, the COVID-19 pandemic struck the global economy.
The COVID-19 pandemic affected demand for oil globally, as major industries were placed under lock globally in order to curb the spread of the Coronavirus. In Nigeria and across the world, governments adopted the restriction of movements and lockdown of businesses - this significantly reduced the demand for oil globally.
With demand falling, the market was filled with more oil than needed, leading to a further drop in oil price as oil companies started negotiating from a weaker position to offload their commodity. The fall in oil prices affected the revenue of oil companies in Nigeria in the second quarter. With the country projected to enter recession before the year-end, the fall in revenue is expected to continue.