In brief
Earnings Update
- Lower finance costs cushion earnings as revenue contracts: GOIL Plc released its unaudited 1H2026 financial results, posting a modest 3.3% y/y growth in profit-after-tax to GHS 75.7mn. The mild uptick in earnings was underpinned by a 1.9% y/y decline in cost of sales to GHS 8.8bn and a 44.6% y/y plunge in financial charges to GHS 40.8mn. Revenue declined by 1.2% y/y to GHS 9.2bn despite a 48.2% y/y surge in sales volume, alongside a 12.0% y/y rise in ex-pump petrol price and a 23.8% y/y increase in diesel price. We attribute the fall in revenue primarily to lower revenue contributions from subsidiaries, as GOIL Plc’s standalone revenue increased by 19.7% y/y to GHS 6.3bn. Similarly, the 1.9% y/y decline in Group cost of sales reflects lower costs from subsidiaries, which more than offset the 19.6% y/y increase in GOIL Plc’s standalone cost of sales to GHS 5.9bn. Financial charges plunged by 44.6% y/y to GHS 40.8mn. As highlighted in our 1Q2026 report, GOIL’s decision to refinance its USD-denominated debt continued to mitigate finance costs in 1H2026. The reduction in BP supplier debt from USD110.0mn to USD30.0mn, coupled with relative Cedi stability and lower domestic interest rates, have helped to keep financial charges subdued. We maintain our view that lower finance costs should provide a tailwind to earnings through 2026, partly mitigating pressure from weaker revenue growth.
Strategic Near-to-Medium-Term Outlook
- We maintain a cautiously positive outlook on GOIL, supported by strong volume growth, market-share gains, lower financing costs and emerging opportunities from its bitumen business. GOIL’s 48.2% y/y increase in sales volumes lifted market share to 13.6%, strengthening its position as Ghana’s leading OMC. We expect its extensive retail network and competitive positioning to support further volume growth. The GOIL-SMB Bitumen Plant also provides a meaningful medium-term growth opportunity. We expect increased road construction under the Government’s Big Push programme to drive demand for bitumen, supporting higher plant utilisation, volumes and topline growth. Meanwhile, the refinancing of USD-denominated debt and reduction in BP supplier obligations should keep finance costs subdued and provide continued support to earnings. However, thin margins remain a key constraint on earnings conversion. Despite higher volumes, Group revenue declined by 1.2% y/y, while operating and net margins remained weak at 1.6% and 0.8%, respectively. The divergence between strong volume growth and subdued Group revenue also highlights the importance of subsidiary performance. Overall, we expect volume growth, lower finance costs and the bitumen plant to support earnings, but sustained margin expansion and stronger conversion of volume gains into revenue will be critical to unlocking further earnings growth.
Key risks to valuation
- Geopolitical tensions (Prolong US-Iran conflict), lower than expected demand for Bitumen, lower-than-expected demand, intensifying competitive pressures, exchange rate volatility, unexpected global energy price shocks, regulatory risks and price controls, unexpected spike in finance costs and supply chain disruptions.