Oando targets return to profitability

JSE- and Nigeria-listed Oando says its first half results to June were adversely impacted by foreign exchange losses.

Johannesburg - JSE- and Nigeria-listed Oando - Nigeria’s largest independent energy conglomerate - says its first half results to June were adversely impacted by foreign exchange losses.

In a statement issued on Tuesday, the company said turnover grew 18 percent to N212 billion, but its gross profit dropped by 49 percent to N19 billion. Its post-tax profit also declined, although only by 23 percent, to N27 billion as it made a N28.6 billion foreign exchange loss.

This was due to the Central Bank devaluating the Naira, which impacted Oando’s bottom line because of its dollar-denominated liabilities.

It says, as a result, it has taken action by taken action by converting $133 million liabilities on its books to N38.6 billion which are currently being serviced by naira, leaving only dollar denominated liabilities to be serviced by its dollar earnings.

“In the period under review we have executed 70 percent of our asset disposal target and 100 percent of our refinancing target and are poised to return the business to profitability by year end 2016.”

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Although the company had several upstream operational highlights, its downstream operations were impacted by the lower realised price per barrel of oil, which came in around $50 during the period.

It also saw “operating challenges” in the notoriously factitious Niger Delta that cut production by a quarter.

CEO Wale Tinubu says the “first half of the year has attested to the deplorable state of security in the oil and gas environment in Nigeria, having experienced a 25 percent decline in production volumes arising from the increased disruptions from militant activities”.

Tinubu adds the company has benefited from a price hedge, which helped to calm the effects of the disruption of production activities.

IOL