Posted by Stories by Uche Obike and Eromosele Abiodun on
Oando Plc has announced N87.15 billion turnover for the half year ended June 30, 2005, compared to N40.75 billion for June last year. This represents an increase of 114 per cent.
Oando Plc has announced N87.15 billion turnover for the half year ended June 30, 2005, compared to N40.75 billion for June last year. This represents an increase of 114 per cent.
The company's results for the period under review released to market operators further showed profit after tax of N1.55 billion, a significant increase from the N764 million in half-year of 2004, representing a 103 per cent improvement in profit after tax.
When contacted, Head, Corporate Communications, Oando Plc, Ms. Tokunboh Durosaro said the improved profit was made on the back of markedly lower interest payments and additional income streams being; a 61 per cent contribution by downstream marketing, 31 per cent contribution by supply and trading, and six per cent contribution by Gaslink and two per cent contribution by Oando Energy Oil Services.
She explained that the reasons for the improved performance were consolidation of accounts and a heightened drive for improvements in operational efficiency to lower cost.
Durosaro further said that gross margin percentage was 7.1 per cent of turnover, compared to 8.9 per cent last year, which she attributed to continued margin erosion in downstream marketing. "The reduced margin was based on a mixture of reduction in importation of certain products where the landing costs far exceeded the regulated pump price and the purchase of products from NNPC at higher prices. However, we note that the margin erosion would have been more pronounced if we had not adopted a strategy to focus on driving increased concentration in higher margin businesses," she said.
Explaining further, Durosaro said that the earnings before interest, taxes, depreciation and amortisation (EBITDA) of the company was impressive at N2.71 billion in half-year 2005, as against N1.8 billion in half-year 2004, a 51 per cent increase in 2005 over 2004.
According to her: "A key driver is that our EBITDA for the half-year 2005, unlike prior years, has not been eroded by high interest charges. Interest charges for the half-year ended June 30, 2005 was only N71 million for the whole group as opposed to N1.17 billion in June 2004."
Oando's balance sheet showed that it has continued to maintain a strong fixed assets base and in the half year to June 2005, its fixed assets were valued at N27.3 billion, compared to about N22.32 billion in the half-year of 2004.
Durosaro said the consolidation of Oando's financial statements has created a new face to the group's business.
"Thus, current assets increased significantly to N36.80 billion from about N18.76 billion in the same period last year. The reasons are substantial increase in cash positions across our entities due to the success of our strategy to build cash value; receivable from other marketers, letters of credit opened on importation of products on behalf of other non-marketers resulting from deregulation of the downstream sector, and finally high stock levels which is due to improved storage capacity and consistent with the increase in turnover," she said.
The company's spokesperson said that the board is of the view that the result of the half-year 2005 showed that the firm continued to encounter the challenges of grossly reduced margins in downstream marketing, but continued to benefit from higher margins through its diversified portfolio.
She assured that the company has been positioned to attain the number one position in down stream oil marketing in Nigeria and accrue the higher value benefits of an expanded energy platform with opportunities in upstream, gas and power.