Home Business We Are Evolving, Says Oando GCE Wale Tinubu

We Are Evolving, Says Oando GCE Wale Tinubu

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*Energy Group targets long term profitability
By Akin Akinremi

Oando PLC, Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, recently announced a N4.1 billion Q1 profit, which buoyed investors and rallied the company’s share price on the Nigerian Stock Exchange (NSE).
Oando’s reinvigorated strategy is reliant on key corporate initiatives to drive the company back to profitability and optimise its balance sheet via aggressive debt reduction and recapitalisation.
Despite the prevalent challenging operating landscape, the company echoed in a Facts Behind the Figures session at the NSE, a desire to return the Group to consistent profitability by growing its dollar earning higher margin upstream and export trading businesses. 
 
Commenting on the company’s confidence in its diversified business model and the long-term prospects for growth in Nigeria and beyond.
Mr. Wale Tinubu, Group Chief Executive, Oando said: “This first quarter of 2016 demonstrated our dedication to return our business to profitability by the end of the 2016. We have implemented constructive corporate initiatives which are driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry.
“The successful and ongoing implementation of these initiatives reiterates our strategy of growth, deleverage and a return to profitability by the end of 2016. As a group we have placed our focus on growing our upstream higher margined business while still holding fundamental interests in the midstream and downstream sectors. We look forward to a rewarding year, where we solidify our aspirations and return to profitability.”  
 
In keeping with corporate best practice and to assuage investors’ concerns, the company has moved to swiftly issue an earnings guidance to report materially lower earnings for the second quarter of 2016 due to the impact of the Naira devaluation against the US dollar (“USD”), resulting in unrealized foreign exchange losses. The announcement is based on the company’s unaudited financial statements for the period ended 30th June 2016.
 
According to a statement issued by the company, “the impact of the Naira devaluation by the Central Bank of Nigeria is expected to amount to an unrealized foreign exchange loss arising from USD denominated liabilities, outstanding bank trade facilities as well as vendor payables.
As at the time of the devaluation the company had USD denominated borrowings of ~$260 Million in our Naira dominated earnings businesses, consisting of ~$68 Million in core loans, $89 Million in bank trade facilities, ~$83 Million in Asset Financing and $21 Million in other payables.
A circa 40% devaluation in the value of the Naira against the US dollar from the bank rate of N199.00:$1.00 to N280.00:$1.00, has effectively resulted in these significant foreign exchange losses which we have prudently booked into our financial statements.”
 
The Group also recently agreed a N70.5 billion recapitalisation of its Downstream business with Vitol, the world’s largest commodities trader and Helios Investments Partners, a premier West African focused private equity firm. Oando’s restructuring is a microcosm of the global landscape with foreign exchange pressures leading to fiscal austerity and consolidation in many petro-cash economies.
 
Mr. Tinubu underlined the Oando’s business paradigm shift in light of global occurrences: “We are evolving to adapt. Market-driven efficiencies have encouraged us to implement a necessary corporate reset through recapitalization to ensure alternative capital access to optimize our business operations and value preservation for our shareholders.”
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