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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.’’

 

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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.

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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.

Stanbic IBTC

 

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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

Flour Mills moves to diversify funding sources with N29.8 billion bond listing

Flour Mills Nigeria Plc lists N29.8 billion bonds to diversify funding sources from the Nigerian capital market.

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Flour Mills makes one of the largest contributions to COVID-19 relief fund

Flour Mills Nigeria Plc’s fresh N29.8 bond listing will help the nation’s leading food business company to explore diversified funding sources from the Nigerian capital market, with the hope of enhancing growth and the development of the company.

This statement was made by the Group Managing Director of FMN, Mr. Omoboyede Olusanya, at the listing of the Tranche A and Tranche B bonds valued at N29.8 billion on the Nigerian Stock Exchange (NSE).

The food and the agro-allied company which has remained Nigeria’s largest and oldest integrated agro-allied business with a broad profile and robust Pan-Africa distribution issued these bonds under its N70 billion Bond Issuance Programme.

Olusanya said that the company would continue to explore funding opportunities inherent in the capital market to ensure business growth and continuity.

While speaking about the Credit Rating of the Programme, he disclosed that FMN’s credit rating, as well as the operational financing of the Group, have improved considerably.

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According to him, the bonds floated by Flour Mill will help to strengthen the company’s capital base and provide the needed working capital required by the Company. He added that Flour Mills Group will continue to deleverage and replace short term financing with longer-tenured and lower price funding to optimize capital structure and reduce financing cost.

He noted that Flour Mills will continue to explore opportunities to raise fundings via the capital market as this enables the company to diversify its funding sources and continue to play a role in the capital market as a significant player in it.

What they are saying

The Group Managing Director of FMN, Mr. Omoboyede Olusanya, at the virtual event, said;

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  • “We are delighted with the response from the market, we are happy to be listed.
  • “We are introducing an N29.9 billion listing under an N70 billion bond issuance cover; we will continue to raise funding to diversify our funding sources.
  • “The company remains passionate about feeding the nation to improve the quality of living for Nigerians through increased production and investments in backward integration.”

What you should know

  • With the successful issuance of the new N29.8bn Tranche A and Bonds, FMN has utilized its bond issuance program registered in 2018.
  • It is important to note that the Senior Unsecured bond listing includes an N4.89bn under Series 4 Tranche A of the bond issuance programme, at a 5.5% rate for 5 years, due by 2025, and a 25bn under Series 4 Tranche B of the same program at a 6.25% rate for a tenure of 7 years, due by 2027.
  • The bond proceeds will be used to refinance existing debt obligations. It will also help the company take collaborative actions to diversify the company’s financing options beyond expensive short term debt.

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Business

Lafarge moves to divest 35% shareholding in CBI Ghana

Lafarge Africa Plc has resolved to sell off its 35% shareholding in Continental Blue Investment Ghana Limited.

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Lafarge Africa provides grant for startups, Lafarge Africa’s latest earnings report reveals 8.5% decline in gross profit , Lafarge Africa gets new CFO one month after resignation of former finance director, Lafarge Plc reveals why it invited Italian man with Coronavirus to Nigeria, Lafarage Africa group Plc posts a revenue of N213 billion in 2019, profit up N17 billion, Lafarge moves to sell 35% shareholding in Continental Blue Investment Ghana Limited

The Board of Lafarge Africa Plc has resolved to sell off its 35% shareholding in Continental Blue Investment Ghana Limited, in order to cut down on costs impacting the Group’s profit.

This disclosure was made in a notification tagged- “Notice of Divestment in Continental Blue Investment Ghana Limited”, which was issued by the Company Secretary, Mrs. Adewunmi Alode.

According to the statement, the Board of Directors of the Group made the decision to divest its 35% shareholding in Continental Blue Investment Ghana Limited (“CBI Ghana”), in line with the resolutions made at the emergency board meeting which held yesterday 20th, January 2020.

This move was made to set off the cement manufacturer on the path of sustainable growth and profitability, as Lafarge’s investment in CBI Ghana has depleted significantly over the years.

What you should know

  • This is not the first time the company has had to sell off an unproductive investment in an effort to cut down on deadweight cost, as key players in the Cement industry like BUA and Dangote Cement continue to show strength and resilience through their effective cost minimization strategy which worked well in 2020.
  • Recall that in August 2019, Lafarge Africa sold off all its stakes in Lafarge South Africa Holdings (LSAH). This move helped the company to cut down costs coming from its South African subsidiary, which had been making billions of naira worth of losses for years.

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Companies

Multiverse forecasts N39.5 million profit in Q1 2021

The management of Multiverse Plc has projected a revenue of N76 million and a profit of N39.5 million in Q1 2021.

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Multiverse Mining and Exploration Plc has projected that in the first quarter of 2021, the mining and exploration company will generate N76 million in revenue, and post a profit of N39.5 million.

These projections were made by the company in a recent earnings forecast issued by the Management, and signed by the Corporate Secretaries of the company.

Key highlights of the earnings forecast for Q1 2021

  • Total revenue is projected at N76 million.
  • Turnover from agency sale is projected at N1 million.
  • Agency cost is s projected at N850 thousand.
  • Total expenses are projected at N7.8 million.
  • Operating Profit is projected at N67.3 million.
  • EBIT (Earnings Before Interest and Taxation) is projected at N67.3 million.
  • Interest Expense is projected at N27.8 million.
  • Profit after tax is projected at N39.5 million.

Key assumptions made to support the earnings forecast and projection of the company

The earnings forecast was made on the ground that there won’t be any significant change in the economic policies of the Federal Government, while the monetary policies of the CBN would not be altered significantly.

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The company also maintained that there would not be any industrial unrest that would affect its production and sales volume, while the profit of the company would not be pressured by rising costs of inputs, as prices of materials used in production shall be stable in the period under review.

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