MRS OIL NIGERIA PLC: TRYING HARD TO STAY IN CONTROL

It is almost definite that it is not in MRS Oil Nigeria PLC's hands to determine how close to the loss league it ends the current financial year but it is trying hard to stay in control. That is, according to figures released for the first half to June.
According to the figures, the cost incurred by MRS Oil from borrowing money to stay active grew by leaps to N466.4 m from only N144.1m by June in 2014. In other words, financiers are getting a much bigger share of the company's value added when compared to 2014.  And what is more, by June 2014, only 34.6 per cent of that full year's charge had been incurred.
However, the same figures indicate that MRS Oil is trying very hard to stay in control of its fortunes this year. While turnover dropped by 21.6 per cent to N36984.8m from N47158.8m, it actually  did commendable battle with its costs.
In particular, cost of sale dropped ahead of the drop in turnover at minus 22.4 per cent from June 2014's N44217.2m to N34309.7m and distribution and administration expense too dropped by 22.3 per cent to NN2706.1m from N2767.9m.
In addition, income from other sources rose by 29.4 per cent to N562m from N434.4m.
All these though, could not effectively help MRS Oil to absorb the leap in finance charges. Hence its profit before tax dived by 86.1 per cent to N64.4m compared to N463.9m by June 2014.
Thus, the very marginal profit margin of 0.98 per cent recorded in the first half of 2014 turned out to be memorable alongside the 0.17 per cent by June this year.
IN SUM:
* It will take a miracle to get MRS Oil to report improved profit margin this year even if it continues to successfully hold down operational costs.
* Perhaps the way out in the near future is either injection of new capital or recourse to cheaper source of funds.

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