TOTAL NIGERIA'S LIQUIDITY BATTLE.

Total Nigeria is apparently doing battle with its liquidity right now , of its results for nine months to September are anything to go by.
On the surface the aggregate is still tough looking because Total Nigeria's working capital deficit widened by 25.2% to N10356.9m from N8270.4m.
Under this surface, Total Nigeria reduced borrowings by 6.05% to N14734.5m; in addition to 27.2% drop in trade payables and increased inventories to N20082.5m. All these involved cash outflow.
From the figures, these were possible as cash decreased by 49.1% to N7370.3m from N14468.4m by December 2014; trade receivables dropped 37.4% to N22133.2m from N35379.7m.
Meanwhile Total Nigeria's cost control paid off as 10.4 % drop in turnover by September to N159299.3m from N177807m failed to depress profit before tax beyond 4.64% from N4204.5m to N4009.6m.
Hence, there was a slight shift in the company's profit margin to 2.52% from 2.36% reported by September 2014.
NOTE:
* The decrease in cost pressure must have been helped by drop in finance cost consequent on the reduced borrowings.
* However given the macro situation with petroleum products marketing it will be hard for Total Nigeria to end the year significantly better than it achieved in the nine months to September.

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