Forte Oil Plc, which owns a power plant and sells gasoline in Nigeria, recorded a double digit growth in profit amid a foreign exchange restriction hurting the operations of petroleum oil major marketers in Africa’s largest economy.
For the first three months through March 2016, Forte Oil’s net income increased by 21.84 percent to N954.28 million from N783.14 million as at March 2015.
Sales were up by 7.68 percent to N35.06 billion as the company embarks on capital projects that will help bolster top lines while pursing the strategic objective of adding value to shareholder’s wealth.
The company’s operating profit jumped by 62.66 percent to N2.44 billion while gross profits were up by 18.50 percent to N4.80 billion in the period under review.
A higher margins means a firm has minimized direct costs attributable to projects while remaining profitable and efficient.
Experts say the double digit growth in profits recorded by Fort Oil is commendable and impressive given the challenging environment it operates in.
Nigeria, Africa most populous nation has been struggling with a sharp fall in oil price to $45 a barrel, from $112 a barrel in mid 2014, an uncertainty that forced the apex bank to impose capital controls or ration foreign exchange to businesses in order to curb inflation.
The central bank policies has hard hit gasoline suppliers as they find it difficult to source dollars to import petroleum products, a situation that has caused scarcity of the products, and, therefore, resulted in long queues.
Analysts say it is high time policy makers fix the refineries to full capacity, deregulate the downstream oil and gas sector and allow the flow of foreign exchange to fuel marketers. By so doing, Nigeria will surmount the current challenges of scarcity casing long queues.
The naira has been pegged at $197-199 since March 2015, spiking inflation to 12.80 percent in March from 11.40 percent in February while economic growth has slowed to 2.80 percent.
Forte Oil’s net finance costs has risen by 73.21 percent to N1.14 billion in the period, driven by interest on loans acquired for the purpose of financing capital projects.
The oil giant took control of the Geregu power station in 2013 following the sale of power generating assets by the Nigerian government to private investors, in an attempt to end daily blackouts.
It expects an increase in the operations of its Geregu power station to 435 megawatts capacity by July from about 150 megawatts currently, which will cushion any slowdown from the decline in oil prices.
Forte Oil plans to raise as much as N100 billion in equity or debt as it aims to consolidate its share of the market. The company operates 500 gasoline stations in Nigeria as well as eight retail outlets in Ghana.
Forte Oil’s share price closed at N275.14 on the floor of the exchange while market capitalization stood at N358.34 billion.
BALA AUGIE
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