Oando Plc, Nigeria’s indigenous energy group, on Thursday presented its unaudited financials for the half-year ended June 30, 2018, with net profit growth at 86%, significantly outperforming the 11% rise in revenue.
A statement accompanying the result, filed with the Nigerian Stock Exchange (NSE), by Ayotola Jagun, its Company Secretary, quoted Wale Tinubu, Oando’s Group Chief Executive, as linking the growth to a combination of the oil price rally, the stable operating environment, fiscal prudence and a substantial free cash-flow.
According to him, there was also “the resolution of Joint Venture funding challenges with the Nigerian National Petroleum Corporation (that) has driven increased investment in the upstream sector. This stable operating environment, coupled with our, has reinforced our solid financial footing as we continue to build on the momentum garnered in 2017.”
According to the report, turnover for the period rose by 11.36% from N266.977bn to N297.307bn; while cost of sales grew at a slower 5.46% to N246.295bn, compared to prior half-year’s N233.544bn. This resulted in gross profit for the period of N51.012bn, which was 52.58% better than N33.433bn in the 2017H1.
Other operating income dropped significantly also by 84.46% from N12.662bn to N1.968bn; while administrative expenses climbed 24.22% to N39.137bn, as against the previous N31.506bn. Finance income crawled to N5.088bn, representing a 9.85% improvement over the N4.632bn reported earlier; while finance cost remained at N21bn just like last year.
This left loss before tax therefore at N2.262bn, which was 169.39% higher than the N839.91m of previous half year, while profit after tax came to N8.493bn, helped by the tax credit of N10.755bn; as against the N4.561bn net profit due to the N4.733bn arising from discontinued operations.
A breakdown of revenue for the period showed that supply and trading business contributed the lion’s share ofN110.703bn, a significant decline from prior half-year’s N217.244bn; followed by exploration and production with N35.734bn, down also from N49.699bn. Operating profit was driven by the N8.223bn, a three-fold drop from N25.343bn reported by the exploration and production in 2017H1. Supply and trading sustained a N1.719bn loss; which was also four time more than the N423.186m loss earlier.
This was negligible, compared to the N11.61bn by the corporate office, that was more than double the N5.684bn loss it reported in 2017Q2. Finance cost was boosted by the N3.662bn and N4.004bn respectively by the exploration business and corporate office; compared to N8.191bn and N8.162bn in 2017. From the exploration business, Oando Plc posted a PBT of N4.561bn in its exploration and production segment, down from N17.152bn; the effect of which was tapered by the N11.61bn loss by the corporate office, which was however slightly better than the N12.909bn recorded in the corresponding period of 2017. Also, a total of N13.07bn came from the exploration and production business, which lifted net profit therefrom to N17.631bn, at a time supply and trading suffered a loss of N1.719bn; and corporate office, N11.61bn.
Going forward, a statement by the company assured of plans to continue driving “growth and profitability via our dollar earning portfolios. Our plans in the upstream involves production growth via investment in targeted profitable projects, whilst maintaining fiscal prudence, to ensure we remain less sensitive to short-term price fluctuations. In our Trading business, current plans for growth include expansion of our trading structures in Africa, capitalizing on expanding scope in Southern and East Africa, as well as developing key supply mechanisms into the Middle East and North Africa.”