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Oando unveils profitability course to reward investors

Wale Tinubu, Group CEO, Oando PLC
Wale Tinubu, Group CEO, Oando PLC
Oando PLC, has revealed that the future remains bright for its investors and stakeholders as the company is geared towards profitability and returning value for investors.

Oando, Nigeria’s indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchanges, recently announced a N4.1 billion Q1 profit which impressed investors as it rallied the company’s equity price on the Nigerian Stock Exchange (NSE).

The company’s renewed strategy which hinges on profitability, optimization of its balance sheet and reward to shareholders entails aggressive debt reduction and recapitalization.

During recent facts behind the figures presentation at the Nigerian Stock Exchange (NSE) the company reiterated commitment to return the Group to sustained profitability by enhancing its dollar earnings, higher margin upstream as well as export trading businesses.

Mr. Wale Tinubu, Group Chief Executive, Oando said: “This first quarter of 2016 demonstrated our dedication to return our business to profitability by the end of the 2016”

He also said that the company has put in place constructive corporate initiatives as business drivers in the face of the new global economic restraint and lower oil prices.

Tinubu said that the ongoing implementation of these initiatives reemphasizes the company’s 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.”

“We are evolving to adapt. Market-driven efficiencies have encouraged us to implement a necessary corporate reset through recapitalization to ensure alternative capital access to optimize our business operations and value preservation for our shareholders.” Tinubu said.

In keeping with corporate best practice and to assuage investors’ concerns, the company has issued an earnings guidance to report materially lower earnings for the second quarter of 2016 due to the impact of the Naira devaluation against the US dollar (“USD”), resulting in unrealized foreign exchange losses. The announcement is based on the company’s unaudited financial statements for the period ended 30th June 2016.

The company further revealed that the impact of the Naira devaluation by the Central Bank of Nigeria is expected to amount to an unrealized foreign exchange loss arising from USD denominated liabilities, outstanding bank trade facilities as well as vendor payables.

It said in a statement that as at the time of the devaluation the company had USD denominated borrowings of $260 Million in 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 circa 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 company revealed.

The Group, it would be recalled, recently endorsed 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. Oando’s restructuring is a microcosm of the global landscape with foreign exchange pressures leading to fiscal austerity and consolidation in many petro-cash economies.

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