Oando Plc released its 9months 2012 unaudited accounts with revenue jumping 24% to N487b when compared to the same period last year. The company posted a Gross profit of N50b as direct cost gulped almost N90 of every N100 of revenue it made. Operating profit increased marginally by 9% to N25b when compared to the sale period last year. However, this was just 5.1% of revenue as against the 5.8% posted last year. The drop in margins doesn’t start or end there. Gross Profit margins was 10% compared to 11% same period last year and profit margin dropped even further to 1.9% from the 2.2% posted same period last year.
Oando Plc, continues to invest heavily in plant and machinery this year, sinking in over N17b in pp&e alone. The company is leveraging on its huge assets of N486b to borrow funds which it has used to finance it operations as well as investments. With long term debt and overdrafts of almost N260b it will need more than 43 times its current operating cash flow to repay its debt without having to refinance or source for additional equity. That is wishful thinking in the current clime as a combination of new equity and net increase in receivables remain the only logical option. Its not as if this is an immediate threat to its operations as banks will remain happy to lend to the local oil giant especially with turnovers set to hit N500b this year.
For shareholders, margins maybe thin and interest payments as a percentage of operating income twice more than comfort levels but returns on equity is where you’d expect at least for now. At almost 9%, it still is below inflation rate but far exceeds what was earned in the whole of 2012. Earnings per share for the first 9months is about N4.4, more than double the N1.62 for 12 months last year. Its share value has lost almost 62% in 12 months trading at N11 currently. The market suggest it is rising again……
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Oando Plc 9months (q3) 2012 unaudited accounts is featured on the website of the NSE