Oando plc has once again demonstrated its ability to deliver good results and create value for shareholders. The indigenous oil company on Friday, March 29, published its financial results for the full year ended December 31, 2018.
Despite a challenging local environment, Oando was able to maintain a trend by posting positive results for the third consecutive year with the announcement of a N28.8 billion Profit-After-Tax (PAT), a 46 percent increase from the N19.8 billion the company posted for full year 2017.
“Our 2018 results demonstrate the solid foundation we have built across volatile commodity price cycles, and our ability to deliver profitability despite a challenging local operating environment,” said Wale Tinubu, Oando’s group chief executive.
“Over the last few years, we have developed a reliable platform for future growth through the execution of a corporate strategy designed to streamline our operations, reduce our debt and optimise our asset portfolio,” Tinubu said.
A review of Oando’s results shows positive performance across most of its financial indices, reaffirming the company’s concerted efforts at and commitment to reversing the tide following the oil price crash in 2014.
As at full year-end 2018, the company’s turnover increased by 37 percent to N679.5 billion compared to N497.4 billion in 2017, driven primarily by higher oil prices resulting in higher oil revenue and higher gas prices, which led to higher gas revenues. In addition, gross profit grew by 9 percent to N96.3 billion, from N88.1 billion in 2017.
The company’s balance sheet remained strong with a 46 percent increase in PAT to N28.8 billion, from N19.8 billion in the comparative period of 2017, driven by higher revenue and income tax credits. Its total group borrowings decreased by 11 percent to N210.9 billion, from N237.4 billion in 2017, while long-term borrowings decreased by 23 percent to N76.8 billion compared to N99.6 billion in the same period of 2017.
Since its acquisition of ConocoPhillips Nigeria in 2014, Oando has embarked on a proactive drive to significantly reduce its debt and liabilities. Its corporate facility decreased 55 percent from N473.3 billion in 2014 to N210.9 billion in FYE 2018, and in its upstream business, the company has reduced its debt by 70 percent from $801.6 million in 2014 to $260 million as at FYE 2018.
“Our asset base is delivering strong free cash flows as evidenced by a 70 percent reduction in our upstream borrowings since the closure of our landmark acquisition of ConocoPhillips’s Nigerian assets in 2014,” Tinubu said.
“We remain confident in our ability to deliver significant value to shareholders in the years ahead as well as resuming our dividend payments,” he said.
The company’s FYE 2018 results are further evidence that its management team is focused on maintaining a strong balance sheet, profitability, value creation and a business that is indeed here for good. The company’s third year of strong financial performance is evidence that the company is back to business as usual, thus rebuilding stakeholder confidence in the brand as a viable business to invest in.
“We can see light at the end of the tunnel. My faith in the management of the company grows from strength to strength with each financial result. I’m hopeful that soon, in the very near future, we the shareholders can finally reap the fruits of our labour,” said Kabiru Tambari, an Oando shareholder from Sokoto Zone Shareholders Association.
In addition to an impressive financial statement, Oando recorded operational highlights. In the upstream, Oando recorded a 2 percent increase in proven oil reserves to 479.8 mmboe, from 470.7mmboe, while net revenues in 2018 increased to $407.0 million, from $333.7 million in 2017.
“Our upstream business will continue to pursue production growth initiatives through strategic alliances, whilst ensuring operational efficiency and fiscal prudence,” according to a press statement issued on Oando’s website.
In the downstream, Oando traded over 14 million barrels of crude oil under various contracts with the Nigerian National Petroleum Corporation (NNPC) as well as delivering 739,876 MT of refined products, acting as a key source of liquidity to the Group. The company continues to solidify its relationships with leading international and local banks, maintaining a sizeable and well diversified structured trade finance facilities required to support future growth.
Oando streamlined its portfolio in 2016, by focusing on its dollar-denominated businesses in the upstream and downstream trading sector to drive profitability and ensure value accretion to shareholders as a mechanism to navigate the crash in oil prices which negatively impacted all players in the oil and gas sector. Since the successful implementation of its corporate strategic initiatives, the company has recorded its third consecutive year of profits.
ENDURANCE OKAFOR
