Forte Oil emphasizes dividends payment as proof of performance

Forte Oil Nigeria Plc has stressed the need for sustenance of enhanced performance and payment of dividends to its shareholders, as measures that reflect the strength of innovation and earning potentials.
The company, which recently presented its facts behind the figures to the capital market community at the Nigerian Stock Exchange (NSE) emphasized that as returns on investments remains the primary goal of investors and the company, Forte Oil is positioned to continually grow its earnings with the aim of giving higher returns to shareholders on annual basis.
Mr. Akin Akinfemiwa, Group Chief Executive Officer of Forte Oil Plc, disclosed that it was in the bid to offer more returns to shareholders that the company is embarking of the raising of fresh capital which would be deployed to expand earning opportunities to guarantee germane investments most of which have started bearing dividends.
The Forte Oil CEO said the company would focus on high margin products, fully exploit LPG business, particularly LPG retailing, bottle refilling, optimise and expand Geregu Power Plant Asset, diversify into upstream space through profitable acquisition of upstream assets and through optmising the working capital structure.
“Also in the second half of 2016, we shall focus on increased supply of petroleum products imports as full deregulation kicks in and forex availability increases,” Akinfemiwa said.
He further revealed that the company is focused on making acquisitions in the upstream that would not stress its balance sheet” a development the company is cautiously following.
In preparation for the full deregulation of the petroleum sector, the company has commenced strategies to rightly position for the opportunities as well as the challenges which the full deregulation, is expected to usher in.
The funds would be raised through debt and equity markets. The debt funds would be completed in 2016 while the equity funds would be perfected in 2017. While N50 billion is expected to be raised through the debt market in tranches starting with N15 billion, the company was yet to arrive at the amount to raise from the equity market.
According to the CEO, the board and management of Forte Oil Plc have concluded plans to raise N50 billion debt capital before the end of this year, December 31, 2016. He however explained that discussions are ongoing with the management of the NSE, adding that the company’s strategic focus is to increase supply of petroleum products as full deregulation intensifies.
Akinfemiwa revealed that Forte Oil has commenced talks with the NSE management in respect of the efforts to raise capital, assuring that the company was on track to meet the forecast PBT figure, having achieved N4.3 billion in the first half of the year and a major overhaul of the Geregu Power Plant, which would generate 435MW.
Akinfemiwa attributed the impressive half-year performance of the company to aggressive sales drive, strategic retail acquisition, and prudent approach to cost containment.
Forte Oil reported a revenue of N84.475billion for the half year ended June 30, 2016, showing an increase of 38 per cent, from N61.168billion in the corresponding period of 2015.
Profit before tax (PBT) rose by 31 per cent from N3.255billion to N4.250billion in 2016.
Speaking at the ‘Facts behind the figures’ presentation of the company at the Nigerian Stock Exchange (NSE), Akinfemiwa said revenue grew as a result of ongoing strategic retail acquisitions across the country, increase in pump price of premium motor spirit and increased commercial customer base for both fuels and lubricants.
According to him, gross margins increased by 48 per cent to N12.3 billion, from N8.32 billion largely due to aggressive drive and focus on higher margin products, efficient product sourcing and sales through profitable channels.
“PBT rose 31 per cent to N4.25 billion in H1, 2016 compared to N2.53 billion in the same period in H1 2015 largely due to our prudent approach to cost containment. Forte Oil’s total assets increased by 12 per cent from N121.8 billion to N136 billion driven by over N10 billion paid so far for the major overhaul exercise at Forte Oil’s 414MW Geregu power plant aimed at optimising and increasing its generation capacity from 414MW to 435MW. This business segment of Forte Oil Plc remains our key growth driver,” he said.
Meanwhile, the company’s power business contributed five per cent to the revenue of the group and 15 per cent to PBT as a result of low generation due to ongoing overhaul project and gas supply constraints due to the security challenges in the Niger Delta region.