09 November 2016, Sweetcrude, Lagos – Oando Plc has recorded a net foreign exchange loss of N5.4 billion in the third quarter of this year.
The loss was due largely to the devaluation of Nigeria’s naira and the unfavourable economic environment, which saw the country enter a recession earlier in the year.
“The Nigerian economic environment continues to impact our business as we witnessed a further devaluation of the Naira during Q3, 2016, from an average exchange rate ofN280.00:$1.00 in Q2 to an average of N316.00:$1.00 in Q3 2016, this has resulted in a net foreign exchange loss of N5.4 billion in the 3rd quarter,” Oando said in statement posted on it website.
Oando explained that for the major part of the year, it faced operational challenges due to the unrest in the Niger Delta, but said it found comfort in government’s discussions and engagement in the region, indicating a possible resolution and gradual stabilisation of its production.
Despite these economic challenges, the company said it witnessed improvement in its top line revenue as a result of a new business model of a diversified business with higher weighted dollar earnings in both the upstream and international trading businesses. “This drove revenues up by 96 percent and led to significant foreign exchange gains between the second and third quarters,” the statement added.
Oando’s Group Chief Executive, Mr. Wale Tinubu, said: “Our trading business has grown significantly this year having exported over 11 cargoes of crude with volumes exceeding 11mmbbls and an additional 31 cargoes of other oil-based products year to date. Our business model of dollar denominated earnings is taking shape as evidenced from the increased revenue line (95% increase) and future increases from the upstream business through increased daily production rates and export trading businesses through increased liftings, with a focus to return our business to profitability by year end.”