Oando’s Unprofitable Operations Worsen ₦530bn Equity Deficit

Oando Plc, the multinational energy company, remains stuck in a cost-income structure that leaves little room for the profits needed to repair its more than ₦530 billion equity shortfall.

Despite robust revenue generation, costs have continued to outpace earnings, resulting in pre-tax losses for the second consecutive quarter.

According to the interim financial report for the half-year ended June 2026, Oando reported pre-tax losses for both quarters, with tax credits serving as the only factor keeping the bottom line in positive territory.

This pattern stands in stark contrast to the rapid recovery and equity rebuilding the company urgently needs to create value for shareholders.

While Oando ranks among Nigeria’s top seven revenue-generating corporations, its costs—running nearly parallel with revenues—have so far crowded out profit delivery.

For H1 2026, Oando reported sales revenue of ₦2.06 trillion, but cost of sales consumed ₦1.97 trillion, leaving a slim gross profit of just ₦101 billion—a gross margin of under 5 per cent. This razor-thin margin suggests that, under current conditions, core operations are unlikely to yield meaningful profit.

Non-core activities provided more income than the gross profit from operations, enabling Oando to eke out a pre-tax profit for the period.

Net impairment reversal on financial assets contributed nearly ₦56 billion, while other operating income added ₦48.5 billion. Additionally, a reduction in administrative expenses—driven by net foreign exchange gains—supported an operating profit of ₦127.8 billion at half-year, marking a turnaround from an operating loss of about ₦159 billion a year ago.

However, these gains were offset by heavy finance costs. Interest expenses totalled ₦167.6 billion, and a drop in finance income saw the company swing from net finance income of about ₦13 billion to a net finance cost exceeding ₦161 billion. Oando’s borrowings remain substantial, standing at over ₦2.7 trillion (excluding lease liabilities) as of June 2026.

This left the company with a pre-tax loss of ₦32.8 billion at half-year—an improvement over the ₦145.7 billion pre-tax loss recorded a year earlier. A tax credit of ₦101.4 billion ultimately rescued the bottom line, enabling the company to report an after-tax profit of ₦68.6 billion.

Despite the narrow path to profit, the deep puncture in Oando’s equity base remains, with negative equity of ₦530.4 billion. Although retained deficit has shrunk significantly, most other components of equity capital are still deep in the red.

Management has indicated plans to seek fresh capital injection to repair the company’s capital structure and strengthen its finances for future growth.

With earnings per share at just 8 kobo for the half-year, Oando currently sits in penny stock territory, and sustained profitability remains critical for restoring shareholder value.