20 July 2016, Lagos – Oando Plc has said it would record lower earnings for the second quarter ended June 30, 2016. In a notification to the Nigerian Stock Exchange (NSE), the oil firm said the lower earnings would result from the impact of the Naira devaluation by the Central Bank of Nigeria that is expected to amount to an unrealised foreign exchange loss arising from United States dollars (USD) denominated liabilities, outstanding bank trade facilities as well as vendor payables.
Oando said: “As at the time of the devaluation the company had USD denominated borrowings of $260 million in our Naira dominated earnings businesses, consisting of ~$68 Million in core loans, $89 million in bank trade facilities, $83 Million in asset financing and $21 million in other payables. A 40 per cent devaluation in the value of the Naira against the US dollar from the bank rate of N199.00:$1.00 to N280.00:$1.00, has effectively resulted in these significant foreign exchange losses which we have prudently booked into our financial statements.”
The indigenous energy group bounced back into profitability for the first quarter (Q1) ended March 31, 2016.
Despite the prevalent challenging operating landscape, the company recently assured stock operators during its ‘Facts behind the figures’ session at the NSE, of its desire to return to consistent profitability by growing its dollar earning higher margin upstream and export trading businesses.
Commenting on the company’s confidence in its diversified business model and the long-term prospects for growth in Nigeria and beyond, Group Chief Executive, Oando, Mr. Wale Tinubu, said: “This first quarter of 2016 demonstrated our dedication to return our business to profitability by the end of the 2016. We have implemented constructive corporate initiatives which are driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry.
The successful and ongoing implementation of these initiatives reiterates our strategy of growth, deleverage and a return to profitability by the end of 2016. As a group we have placed our focus on growing our upstream higher margined business while still holding fundamental interests in the midstream and downstream sectors. We look forward to a rewarding year, where we solidify our aspirations and return to profitability.”
Tinubu noted that market-driven efficiencies have encouraged the management to implement a necessary corporate reset through recapitalisation to ensure alternative capital access to optimise our business operations and value preservation for our shareholders.
Oando also recently agreed a N70.5 billion recapitalisation of its Downstream business with Vitol, the world’s largest commodities trader and Helios Investments Partners, a premier West African focused private equity firm.
- This Day