Oando Plc has released its financial result for the year ending December 31, 2023, posting a Profit-After-Tax (PAT) of N60.27 billion- a reversal from the N81.23 billion loss in the previous year.
This is according to the Group’s audited financial statement for the full year of 2023 where it grew revenues from N1.99 trillion in 2022 to N2.84 trillion in the year under review.
This represents a 43% growth in revenues from contracts with customers during the period.
Oando Group’s financial performance during the period was severely impacted by the high cost of sales which gulped a whopping 97% of revenues. Cost of sales increased from N1.91 trillion to N2.76 trillion in FY, 2023.
Key Highlights of the result
- Revenues- N2.84 trillion, +43% YoY
- Cost of sales- N2.76 trillion, +45% YoY
- Gross Profit- N85.02 billion, +8% YoY
- Other operating income- N399.98 billion, +1,304% YoY
- Administrative expenses- N261.35 billion, +218% YoY
- Operating Profit- N218.3 billion, +961% YoY
- Finance cost- N133.38 billion, +37% YoY
- Finance Income- N16.9 billion, +7% YoY
- Net Finance cost- N116.47 billion, +30% YoY
- Profit Before Tax- N102.97 billion, +267% YoY
- Income tax expense- N42.7 billion, +120% YoY
- Profit for the year- N60.27 billion, +174% YoY
Commentary: The company’s financial performance shows significant growth in revenue and profitability, with revenues rising by 43% year-over-year (YoY) to N2.84 trillion. However, the cost of sales increased at a faster pace of 45%, bringing gross profit growth down to a modest 8% YoY at N85.02 billion. This stems from significantly elevated inventory costs.
- A key highlight is the sharp rise in other operating income, up by a massive 1,304% to N399.98 billion, contributing significantly to the overall profit boost. This is as a result of foreign exchange gains of N388.02 billion recorded by the company in the period under review representing an increase of 1,079% YoY from the same period of 2022.
- Despite the surge in operating income, administrative expenses also saw a steep increase of 218% YoY, reaching N261.35 billion. This rise in expenses partially offset the gains, but operating profit still surged by 961% YoY to N218.3 billion, driven by both increased revenue and the substantial rise in other operating income.
- Finance costs rose by 37% to N133.38 billion, although finance income only increased by 7%, leading to a net finance cost increase of 30% YoY. Despite these rising financial expenses, the company achieved a profit before tax of N102.97 billion, up by 267% YoY.
- Overall, Oando Plc benefitted from significant depreciation of the Naira in 2023 since its business operates in a dollar-denominated industry otherwise it would have continued to record another year of loss like in 2022.
Crude oil and gas production levels in the year under review
- For the twelve months ending December 31, 2023, Oando Plc’s total production averaged 23,258 barrels of oil equivalent per day (boe/day), marking a 12% increase from 20,703 boe/day in 2022.
- Crude oil production rose significantly by 26% to 6,211 barrels per day, while natural gas production also grew by 10% to 16,808 boe/day.
- However, natural gas liquids (NGLs) saw a decline of 49%, averaging 239 barrels per day compared to 472 barrels in the previous year.
CEO’s comments
The Chief Executive Officer of the company Wale Tinubu commenting on the company’s performance stated thus, “Despite the operational hurdles occasioned by security breaches and persistent pipeline vandalism in the Niger Delta, we achieved a profit after tax of N60 billion, bolstered by the strength of our global trading alliances, a 12% increase in total production, and favourable exchange gains from our foreign currency denominated assets.”
- He further explained that the company’s recent acquisition of NAOC Ltd is a key milestone, enhancing our reserves and infrastructure significantly.
- It hopes to build on its 2014 purchase of ConocoPhillips’ Nigerian unit, which aligns with its strategy to grow reserves and production by taking over assets from exiting international oil companies.