Eterna Plc Q2/H1 Result– Strategic Turnaround Driving Renewed Growth

Eterna Plc Q2/H1 Result– Strategic Turnaround Driving Renewed Growth

Eterna Plc’s FY 2024 results reflect a strong turnaround marked by a return to profitability, double-digit top-line and gross profit growth, and strategic board and capital restructuring. The company has begun to reap the benefits of its repositioning across the energy value chain, including retail, lubricants, LPG, and aviation fueling. With a reinforced leadership team, improved cost efficiency, and shareholder backing for a ₦50bn capital raise, Eterna is poised to consolidate its rebound and deliver medium-term value.

Strengths

• Strong Revenue Growth: Revenue surged 71% from ₦183.3bn in 2023 to ₦313.6bn in 2024, driven by a more diversified energy services offering and improved market share.
• Return to Profitability: Gross profit grew by 136% to ₦39.9bn, while PBT reached ₦4.48bn—a dramatic turnaround from the ₦11.9bn loss in 2023.
• Operational Resilience: The improved performance reflects disciplined execution, better margin management, and strategic repositioning in a volatile industry.
• Robust Governance: Appointment of a new MD/CEO (Olumide Adeosun) and two executive directors, along with re-election of key directors, strengthens leadership for sustainable growth.
• Capital Backing for Expansion: Shareholders’ approval of a ₦50bn capital raise provides a financial buffer and war chest to support expansion into high-growth areas like LPG and renewables.
• Strategic Sector Exposure: Eterna’s presence in downstream retail, lubricants, LPG, and commercial fueling aligns it with critical drivers of Nigeria’s energy transition.

Weaknesses & Risks

• Low Net Profit Base: Despite the turnaround, PBT of ₦4.48bn still reflects a relatively thin margin (1.43% of revenue), suggesting vulnerability to shocks if cost control slips.
• Volatile Operating Environment: FX fluctuations, subsidy reforms, inflation, and oil price dynamics remain structural risks to energy firms in Nigeria.
• Execution Risk: The success of the ₦50bn capital raise and its deployment into accretive projects will be critical to sustaining momentum. Poor allocation could stall growth.

Opportunities

• Expansion into LPG & Cleaner Energy: With the Federal Government promoting gas-based energy and clean cooking fuels, Eterna can leverage its integrated platform to capture emerging demand.
• Retail and Aviation Fueling Growth: As domestic air traffic and auto use rebound, these segments could deliver improved volume and margin growth.
• M&A or Strategic Partnerships: A strengthened balance sheet post-capital raise could position Eterna for regional expansion, acquisitions, or technology partnerships in renewable fuels.

Valuation Outlook

Although Eterna is currently undervalued relative to peers, the dramatic shift from a ₦11.9bn loss to a ₦4.48bn profit demonstrates strong earnings recovery potential.

Assuming:

• Net margin improves to 2–3%,
• FY25 revenue grows 20% YoY to ~₦376bn,
• Net profit reaches ₦7.5–₦11bn range,
• And a P/E target of 8–10x based on emerging market peer multiples,

The fair value range per share could conservatively land between ₦16–₦22, especially after effective deployment of new capital.

Conclusion

Eterna Plc has executed a bold turnaround, supported by decisive leadership changes, strong earnings recovery, and a clearly defined growth strategy. Its multichannel energy exposure, ₦50bn capital raise, and board reinforcement point to medium-term re-rating potential.