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Companies

Oando explains factors behind strong 3rd quarter profits

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Oando Plc sent in this press release providing insights into their performance. The company reported strong third quarter pre-tax profits, its first quarterly profits in about 2 years.

Here is the press release;


Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, today announces unaudited results for the nine months period ended 30 September, 2017, with the following highlights:

  • Turnover increased by 16%, N383.5 billion compared to N329.9 billion (Q3 2016)
  •  Gross Profit increased by 148%, N71.2 billion compared to N28.6 billion (Q3 2016)
  • Profit-After-Tax increased by 120%, N7.1 billion compared to (N35.8 billion) (Q3 2016)

Commenting on the results Wale Tinubu, Group Chief Executive, Oando PLC said:

“Our third-quarter financials are reflective of the success of our strategic initiatives of Growth through our dollar earning upstream portfolio; Deleverage through recapitalization and asset divestments and the expansion of our oil export trading business. The proceeds from our business restructuring have been successfully used in improving our balance sheet with a reduction of N21 billion in our net debt position from N230.6 billion as at December 2016 to N209 billion today. Despite prevailing headwinds, we continue to create value as seen in our improved performance four quarters in a row and remain confident about the resilience of our business model.’’

 

Operational Highlights:

Upstream
Oando Energy Resources (OER) recorded an average production of 39,844 boe/day in the nine months ended September 30, 2017 compared to 43,617 boe/day in the comparative period of 2016.

  • Realized a net income of N26.97 billion ($88.2 million) compared with a net profit of N2.51 billion ($8.2 million) recorded in the comparative period of 2016
    Midstream:
  • Oando Gas & Power (OGP) was rebranded to Axxela
  • Appointed as a shipper on the West Africa Gas Pipeline.
  • Successfully achieved completion of Greater Lagos IV (GLIV) pipeline expansion project

Downstream:

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  •  Oando Trading (OTD) recorded a 48% increase in turnover to N305.75 billion ($1 billion) compared to N206.69 billion ($676 million) in the comparative period of 2016.
  • Traded over 11 million bbls Crude Oil volumes and 800,000MT of Refined Petroleum Products, a 25% growth in traded volumes.
  • The Lagos Marine Jetty (LMJ) officially commenced operations receiving its first product vessel.

The fourth quarter presents an optimistic outlook for the Nigerian oil and gas sector having experienced a third quarter characterized by an oil price increase of 14% from July to September 2017 compared to the same period in 2016. The country also officially exited a 13 month long recession with a positive Gross Domestic Product (GDP) growth of 0.55% in the second quarter of 2017 buoyed by OPEC’s cut in oil production and exemption of Nigeria from the production cut, stability in oil prices and a boost in the nation’s oil production due to the ongoing truce with Niger Delta militants.

Operational Update:

Upstream:

  •  Oando Energy Resources (OER) recorded an average production of 39,844 boe/day in the nine months ended September 30, 2017 compared to 43,617 boe/day in the comparative period of 2016. This was primarily due to significant reductions in gas production and delivery caused by a ruptured Gas Transmission System (GTS-4) gas line which supplies gas to the Nigerian Liquefied Natural Gas Limited (NLNG). Downtime suffered by the Trans Forcados pipeline led to repairs and planned maintenance activities that resulted in reduced production from Ebendo (OML 56)
  • OER recorded a net income of N26.97 billion ($88.2 million) compared with N2.51 billion ($8.2 million) in the comparative period of 2016. The increase in profitability was primarily due to improved revenue from the sale of OML 125 & 134, lower production expenses, reduction in depreciation and net losses on financial instruments which were offset by lower tax recoveries

Midstream:

  • Following the partial divestment of our midstream subsidiary Oando Gas & Power (OGP) to Helios Investment Partners, a premier Africa-focused private investment firm, OGP changed its corporate identity and rebranded to Axxela Limited.
  •  Axxela was appointed as a shipper on the West Africa Gas Pipeline positioning the Company to supply gas along the West coast.
  • Axxela also completed the Greater Lagos IV (GLIV) 12 inches x 9km pipeline expansion network from Ijora through Lagos Island to Bonny Camp, Victoria Island creating an opportunity for the Company to increase its current 175 customer base by supplying gas to industrial customers looking to for alternative, cheaper and more efficient power sources.

Downstream:

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  •  Oando Trading (OTD) witnessed a 25% growth in traded volumes year-on-year, led by a solid increase in Crude Oil trading activity whilst turnover grew by a creditable 48% to N305.75 billion ($1 billion) compared to N206.69 billion ($676 million) in the comparative period of 2016. This is as a result of improved activity and oil price recovery. Year-to-date Crude Oil volumes have exceeded 11 million bbls, while over 800,000 MT of Refined Petroleum Products were traded within the same period.
  • OTD continues to solidify its relationships with key leading International and African banks, securing access to over N215.4 billion ($700 million) of immediately available Structured Trade Finance facilities, enabling the Company to achieve greater trading capacity and in turn, more volumes.
  • The Lagos Marine Jetty (LMJ) and petroleum off-loading facility, officially commenced operations receiving its first product vessel on the 31st of May 2017; to date it has received a total of 10 vessels. This novel infrastructure will provide substantial savings estimated at over $120 million annually to product importers and the country as a whole.

Here is a copy of the press statement announcing the results.

 

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Companies

COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says

NB Plc’s operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase and FX devaluation.

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Heineken scoops more Nigerian Breweries shares in insider disclosure

The management of Nigeria’s leading brewer, Nigerian Breweries Plc has revealed that its operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase, FX devaluation and scarcity of foreign exchange.

This statement was made by the Managing Director of Nigerian Breweries, Mr Jordi Borrut Bel, at the company’s pre-AGM media briefing for the financial year-end 2020, which held in Lagos this week.

He noted that the increase in the brewer’s cost in 2020 was due to the COVID-19 pandemic which disrupted the company’s operations, as well as the increase in VAT, devaluation and FX scarcity which has put pressure on input cost.

READ: Alcoholic beverage makers on NSE lose a total N27.7 billion in a single day

The Nigerian Breweries boss explained further that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity.

He explained that the increase in costs of goods sold, as reported in its audited financial results, could also be linked to the increase in the volume of goods sold, as the company’s sales volume in 2020 increased by almost the same percentage as the cost of goods sold.

To deal with this challenge going forward, he revealed that the company is focused on the supply chain, and will continue to seek out ways to mitigate any of the price increases coming from FX scarcity.

READ: Brewery sector: A quarter to forget

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The company’s profitability in question?

An analysis of the company’s result revealed that despite the 4.3% increase in net revenue from N323.00 billion recorded in 2019, to a total of N337.01 billion in 2020, the company’s profit declined significantly by 53.3% to N7.53 billion.

Speaking on this, Jordi Borrut in his statement at the press briefing noted that the brewer’s business performance in 2020 was quite impressive especially in the face of the COVID-19 pandemic and economic recession. Despite these challenges, the company maintained a strong and healthy balance sheet.

There was a slight reduction in profitability but compared to the previous year, the business witnessed an improved growth in revenue. The significance of this is that the business became more stable and healthier,” he said.

READ: Nigeria’s triangular beer war on the rise with the arrival of Budweiser

What you should know

  • Nigerian breweries, being the largest brewer in the country, maintained its stance in terms of generating profits year-on-year. The company emerged as the only brewer to record a profit of N7.37 billion from its operations in 2020, 54.3% lower than 2019 figures (N16.1 billion).
  • From this, the leading brewer was able to pay shareholders a total dividend of N7.5 billion, translating to a dividend of 94 kobos per share – a dividend payout in which exceeds 100%.
  • While Guinness and International Breweries made a loss of N12.6 billion and N24.9 billion respectively, this reality impacted their ability to pay their shareholders dividends in 2020.

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Business News

Highest paid Nigerian bank MD/CEOs of 2020

Bank MD/CEOs in Nigeria earned a combined N1.5 billion in salaries in 2020.

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The banking sector, especially commercial banks, is one of the most profitable sectors of the Nigerian Economy churning out profits of close to a trillion in 2020 alone. They are also one of the highest employers of labours in the country employing over 93,000 Nigerians.

Sitting at the helm of affairs is the Chief Executive/Managing Director, the highest-ranking executive in the organization saddled with the responsibility of making the best corporate decisions, oversight of the execution of the organisation’s corporate strategies and most importantly increasing the shareholders’ return. The buck basically stops on their table.

Thus, these enormous responsibilities also come with a considerable executive compensation for their service making them ostensibly the highest-ranking staff of the bank.

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

In typical Nairametrics fashion, we bring to you a list of the highest-ranking bank CEOs for 2020 based on their executive compensation (exec comps). The bank MD/CEOs under our review earned over N1.5 billion in salaries in 2020.

The data was sourced from the published audited accounts of the bank and verified by Nairametrics Research.

 

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