Conoil slashes FY’25 dividend nearly 50% as profit drops 75%

By Philippine Duru

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Conoil Plc, the oil marketing company owned by Nigerian billionaire Mike Adenuga, has announced a sharp reduction in its full-year 2025 dividend after posting a steep decline in profitability, reflecting mounting pressure in the downstream oil sector.

The company revealed that its net profit plunged by about 75 per cent year-on-year, forcing a significant downward revision of shareholder returns as earnings weakened across its core business segments.

As a result of the earnings contraction, Conoil slashed its FY’25 dividend payout by nearly half compared to the previous financial year, marking one of its most substantial dividend reductions in recent years and signalling a more cautious outlook for investors.

The profit downturn was attributed to a combination of rising operating costs, foreign exchange volatility, tighter margins in petroleum product distribution, and competitive pressures in Nigeria’s deregulated downstream oil market. Industry analysts also pointed to broader macroeconomic headwinds, including inflationary pressures and fluctuating global crude oil dynamics, as contributing factors.

Despite the decline, the company maintained that it remains fundamentally resilient, with management emphasizing ongoing efforts to optimize operations, strengthen supply chain efficiency, and protect profitability amid a challenging market environment.

Conoil operates across the downstream oil and gas value chain, including petroleum product marketing, aviation fuel supply, and lubricant production and distribution. The sector has faced increasing volatility since Nigeria fully deregulated petrol pricing, exposing marketers to sharper input cost swings and more competitive pricing structures.

Analysts say the steep drop in earnings reflects the broader struggles of oil marketing firms adjusting to post-subsidy removal realities, where margins are increasingly influenced by global pricing trends and foreign exchange liquidity conditions.

Market observers noted that the dividend cut may weigh on investor sentiment in the short term, particularly among income-focused shareholders who have historically relied on Conoil for stable dividend returns.

However, some analysts argue that the reduction may be a necessary step to preserve balance sheet strength and support reinvestment in operations at a time when the downstream sector is undergoing structural transformation.

“Profitability across oil marketing companies has become more volatile due to deregulation and FX pressures. Firms are now prioritizing liquidity retention and operational efficiency over aggressive dividend payouts,” a Lagos-based energy analyst said.

The company’s performance also reflects broader trends in Nigeria’s oil and gas marketing industry, where firms are grappling with elevated logistics costs, foreign currency exposure, and shifting demand patterns.

Despite the weak earnings, Conoil is expected to continue benefiting from its strong brand presence and extensive retail network, which remain key competitive advantages in the downstream sector.

Investors will now be watching closely for signals on whether the earnings slump represents a cyclical downturn or a more prolonged adjustment phase for the company as Nigeria’s fuel market continues to evolve.

The sharp reduction in dividend payout underscores the increasing pressure on listed energy firms to balance shareholder returns with operational sustainability in an era of heightened market volatility and regulatory transition.