Oando Plc grew its net profit by 405 per cent to N19.7 billion in 2017, sustaining a positive trend of good performance over the past five quarters.
Key extracts of the audited report and accounts for the year ended December 31, 2017 released at the Nigerian Stock Exchange (NSE) at the weekend showed that gross profit rose by 81 per cent from N48.6 billion in 2016 to N88.1 billion in 2017. Profit before tax stood at N20.76 billion in 2017 as against a pre-tax loss of N62.96 billion in 2016. Profit after tax jumped by 405 per cent from N3.9 billion in 2016 to N19.8 billion in 2017. But group turnover declined by 13 per cent from N569.2 billion in 2016 to N497.6 billion in 2016. Net debt reduced to N217.1 billion in 2017 as against N230.6 billion in 2016.
Group Chief executive Officer, Oando Plc, Mr. Wale Tinubu, said 2017 was an important and positive milestone for the company, despite the challenges in the operating environment and regulatory issues that led to the institution of forensic audit of the company by the Securities and Exchange Commission (SEC).
“The business recorded a year-end profit of N19.8 billion; a culmination of four consecutive quarters of positive results, validating our promise to shareholders of returning to and maintaining profitability. This comes in the wake of oil prices on an upward trajectory, an improved operating environment, the exit of a 13-month long recession and, most importantly, the continued strengthening of our business model through the effective implementation of our strategic initiatives of growth through our dollar earning upstream portfolio; deleverage through asset divestments and the expansion of our oil export trading business,” Tinubu said.
He said that while the company has continued to provide full support to the SEC, hoping for a smooth and speedy conclusion of its investigation, it remains optimistic on its performance in 2018.
“We have commenced 2018, buoyed by our unrelenting commitment to our strategy and remain confident in its success,” Tinubu said.
Interim report and accounts of Oando for the first quarter ended March 31, 2018 also released at the weekend showed that turnover rose from N138.27 billion in the first quarter 2017 to N160.55 billion in first quarter 2018. Gross profit doubled from N13.4 billion in first quarter 2017 to N27.94 billion in first quarter 2018. Operating profit also doubled from N7.62 billion to N14.88 billion. The company recorded a pre-tax profit of N6.51 billion in first quarter 2018 compared with pre-tax loss of N647.03 million. After taxes, net profit stood at N4.19 billion in first quarter 2018 compared with N1.71 billion in 2017.
Despite the challenges it experienced in 2017, Oando recorded some operational highlights. In the upstream sector, it hit an average production of 40,188 boe/day in 2017 compared with 43,503 boe/day in 2016. This was primarily due to significant reduction in gas production and delivery caused by the rupturing of Gas Transmission System (GTS-4) gas line and pipeline and terminal constraints at its OMLs 60 to 63.
The upstream business recorded a net profit of N26.33 billion in 2017 as against N91.83 million in 2016. This increase in profitability was primarily due to improved revenue between the periods, and increase in gains on financial instruments which were offset by lower tax recoveries.
In the midstream, Oando’s affiliate, Axxela, recorded an 11 per cent increase in natural gas deliveries in 2017. This achievement was in spite of restricted gas supply in first half 2017 due to the sabotage of upstream gas supply facilities by militants. The construction of Phase IV of the pipeline network in the Greater Lagos Industrial Area and the Central Horizon Expansion Pipeline in Port Harcourt were completed. These projects expanded the firm’s distribution infrastructure and enabled it reach a wider demand area for delivery of gas, consequently increasing its customer base to 175 customers. The Tincan HDD project was successfully concluded; a project which involved restoring leakages at a pipeline that has two river crossings so as to reconnect existing customers to the network.
In the downstream, Oando’s trading subsidiary sustained growth in its crude oil business, resulting in a nine per cent increase in traded volumes. The company continues to solidify its relationships via access to over $700 million of immediately available structured trade finance facilities.
SEC recently lifted the technical suspension placed on the company’s shares after 175 days. By the weekend when the company released its 2017 results, its share price had reached N9.15, a 65 per cent increase in 21 days.
The Nigerian National Petroleum Corporation (NNPC) also recently announced that a consortium consisting of Oando Plc and OilServe Limited had been awarded the Engineering, Procurement, Construction (EPC) mandate for the construction of a gas pipeline stretching from Ajaokuta to Abuja as part of the Ajaokuta-Kaduna-Kano Pipeline. The pipeline is a section of the Trans-Nigerian Gas Pipeline under the gas infrastructure blueprint designed to enable the industrialisation of the Eastern and Northern parts of Nigeria and also enable connectivity between the East, West and North, which is currently non-existent.
