Figures from Nigeria’s listed downstream firm Ardova Plc has revealed how the firm performs in the first quarter of 2020, which is its first financial statement since it officially changed its name from Forte Oil.
For many, Ardova Plc is not a name that rings a bell most especially after it changed its brand name from Forte Oil five months ago but the company is gradually rising from obscurity to arguably a major player in the downstream sector.
Profit After Tax
The company’s Profit After Tax which is the net amount available for the shareholders after all taxation related expenses have been deducted decreased by 85 percent to N497 million from N3.3 billion in the corresponding quarter last year.
Earning Per Share
Ardova Plc announced an 85.0percent decline in EPS to N0.38 per share in its unaudited first quarter 2020 results. The decline in earnings was magnified by a base effect driven by the huge one-off disposal gain of N2.7 billion recorded in first quarter of 2019. On adjusting for the one-off gain, normalised EPS would be lower by 24.0percent YoY.
Profit Before Tax
Excluding the one-off disposal gain of N2.7 billion recorded in the first quarter 2019, profit before tax would be 27.6percent higher YoY at N580.3 million while unadjusted pretax earnings is 81.5percent lower YoY.
Turn over
Ardova grew turnover by 22.3percent to N52.1 billion in first quarter 2020, mainly supported by a 24.6percent increase in fuel revenue to N47.8 billion and a marginal increase in lubricant sales.
Analysts at CSL Stockbrokers said revenue growth was driven by improved product supply and greater market penetration for white products. Notably, revenue rose across PMS (34 percent YoY), ATK (+276.0% YoY), and Lubricants (+0.1% YoY) sub-segments in Q1’20.
Gross Profit
Gross profit, which is the profit a company makes after deducting the costs associated with making and selling its products decreased by 9 percent to N2.7 billion from N3 billion in the corresponding period last year.
PMS Growth
Growth in PMS volumes reflected greater retail presence while the traction in ATK was driven by recent partnerships with international aviation lines.
Interest Expense
Interest expense declined by 76.1 percent year on year in Q1 2020 due to past deleveraging efforts and overall moderation in yields in Nigeria.
Total Borrowing
Total borrowings stood at N5.5 billion against N19.8 billion in first-quarter 2019 while normalised interest cover printed at 4.7x (vs. 1.7x in Q1’19) at the end of the review period
Cash from operations
Net cash from operations increased to N6.4 billion in first-quarter 2020 was driven by improved liquidity management.
Long term strategy
As part of its long term strategy, management restated plans to continue investing in non-fuel revenue initiatives while working with right-fit partners to achieve a 20percent revenue contribution from renewables and higher-margin products by 2024.
“The Ardova Plc we are looking to create is one that is going to try to balance its portfolio; we’re strong on petrol or diesel and even stronger on lubricants but there are cleaner fuels most especially in the renewable energy space, and I think we really need to get into that space,” Olumide Adeosun, CEO of Ardova Plc told BusinessDay about his new plans.
As typical of its competitors, Ardova Plc is primarily focused in the downstream sector with major operations in Petrol, lubricants, bitumen, LPG and diesels space; however under the leadership of Adeosun the company is having braver ideas with the intention of being more of a product company.
“The company we are looking to create is one that’s going to try to balance its portfolio,” Adeosun said in an interview with BusinessDay. “The company will have much more diverse income sources, which will come more from low carbon sources or nontraditional sources.”
