In a remarkable comeback, Forte Oil Plc, which had in 2011 posted a N19 billion loss, returned to profitability the following year with a N1.15billion profit. Today, shareholders of the company are singing a new song as the company, the first to declare its full year result for 2013, posted a profit before tax of N6.52 billion for its 2013 operation, reports Festus Akanbi
Going by the recommendations of its board, Forte Oil shareholders are to receive dividend of N4 per share totaling N4.31 billion dividend payout after the company declared a profit before tax of N6.52 billion for the financial year ended December 31, 2013. This profit before tax of N6.52billion indicates an increase of 467 per cent when compared to N1.15 billion recorded in the same period of 2012. The outstanding share of the company stood at 1.08 billion after its capital reorganisation. According to the financial results, the company’s revenue rose 41 per cent to N128 billion from N91 billion recorded in the corresponding period of 2012, while earning per share increased to N4.32, from 93 kobo posted in 2012 financial year.
A statement from the company explained that Forte Oil achieved a 1164 per cent share price growth in 2013 to emerge the best performing and investment stock on the Nigerian Stock Exchange. It successfully diversified into the country’s power sector with the acquisition of 414MW Geregu power plant under the Federal Government’s privatisation programme The company paved the way for resumption of dividend payment since 2008 financial year having successfully achieved capital reorganisation to offset accumulated losses of more than N55.9billion against share premium last year.
How It Cameback
- In 2011 Forte Oil (formerly African Petroleum – AP Plc) posted a N19 billion loss and was at the verge of failing. The board of the company took a bold step to refocus the company; launched a transformation programme and by 2013, two year into its three-year reform calendar, Forte Oil is showing signs of market dominance.
- It has regained market share in the downstream sector moving from the bottom position amongst the major marketers of petroleum products to the top three by the end of 2013. The company continues to expand its operations through strategic acquisitions of assets, optimizing logistics and execution of cost leadership strategies. It streamlined its business processes to improve overall efficiency and enhance superior customer service delivery, while it embarked on significant expansion of its industrial/commercial customer base to meet its objective of being Nigeria’s energy solutions supplier of choice.
- The company also joined the top league of industry operators to introduce synthetic engine oil for the new generation vehicles, called the Synth10000.
- It further diversified into related high margin energy businesses by making a foray into Nigeria’s power sector, with the acquisition of the 414 megawatts under the Federal Government-led privatisation programme. The power business contributed 10 per cent to its consolidated earnings even though it commenced full operations as the new owners in November 2013. This sector is expected to be the major growth driver as the company estimates the power company’s contribution to PBT to be over 40 per cent going forward.
- The company’s upstream petroleum serving subsidiary continues to contribute significantly to the income stream, thereby creating a strong energy conglomerate with the power business posturing as the key growth driver for the future.
- Good Transformation Strategy – The Group Chief Financial Officer of the company, Mr. Julius Omodayo-Owotuga, said, “We closed 2013 with a growth in revenue, profit before taxes and earnings per share. These growths are by-products of a well- executed business transformation strategy in the last 24 months covering corporate governance, risk management and controls, business repositioning, development and expansion.”
- According to him, the increase in profit before tax is a clear demonstration that the company is on a clear path to dominate its primary market; the downstream petroleum marketing sector, adding that the company’s capital re-organisation approved by its shareholders during the financial year, has also put it in a position to continually guarantee distributions to shareholders without jeopardising growth opportunities.
- “We shall continue to pursue initiatives that spur business growth and efficiency, liquidity management and aggressive diversification into related high margin business that would continue to increase shareholder value and distributions on an annual basis”, he said.
- Group Chief Executive Officer of Forte Oil, Mr. Akin Akinfemiwa, attributed the improved results to clear focus on its business transformation initiatives, which include solid corporate governance and business ethics, enhanced safety health and environmental practices across all business lines and superior customer service delivery. he said.
- The optimisation, according to Forte Oil, will be a demonstration of the company’s commitment to help bridge the current power deficit in Nigeria and help actualize the expectations that Nigerians have of the power sector. The Geregu Power Plant was commissioned in 2007 with three Siemens open cycle gas turbine power generation units totaling 414MW of installed capacity. The three operational units have a rated capacity of 138MW each, and are fueled with gas from two pipelines from a Natural Gas Treatment Plant. These are able to satisfy the fuel requirements of three units running on a full load of 414MW.
This article was adapted and modified from a Thisday Article