Oando posts record high N104.1b profit as Investors show strong positive response to earnings
Investors are placing buy orders for Oando’s shares, with premiums reaching almost the market’s maximum daily allowable increase of 10 percent
Petroleum giants, Oando Plc has recorded nearly the highest possible gain at the Nigerian stock market since the release of its latest financial and operational reports.
Investors have shown strong positive response to the latest earnings reports, which showed a major recovery for the indigenous energy provider.
Oando had at the weekend released its results for the year ended December 31, 2023 showing a pre-tax profit of N104.1 billion, in a major turnaround from recent streak of losses.
Despite the negative overall market situation, Oando has been a major contrarian stock. In the week’s opening trading session, Oando’s share price recorded the second highest gain of 9.75 per cent to close at N12.95 per share.
Yesterday, Oando also closed with the third highest gain of 9.65 per cent to close at N14.20 per share.
The All Share Index (ASI)- the benchmark index that tracks share prices at the Nigerian Exchange (NGX), had indicated average decline of 0.11 per cent for the entire market on Monday. It dropped further by 0.07 per cent yesterday.
Investors are opening up buy orders for Oando’s shares, staking at premium as high as almost the market’s maximum highest daily allowable percentage change of 10 per cent.
Key extracts of the 12-month interim report showed significant growths across key performance indicators, strengthening optimism on the outlook of the energy group, which recently signed a deal to acquire Eni’s shares in one of its Nigerian subsidiaries, the Nigeria Agip Oil Company Limited (NAOC).
Turnover rose by 71 per cent from N1.9 trillion in 2022 to N3.4 trillion in 2023. As against net loss of N81.2 billion in 2022, the company recorded net profit of N74.7 billion in 2023. Pre-tax profit stood at N104.1 billion in 2023, compared with pre-tax loss of N61.84 billion in 2022.
The report also highlighted significant reduction of 23 per cent in the group’s upstream borrowings from $635.6 million in 2022 to $488.9 million in 2023.
The performance of the group was driven by considerable improvements in major business categories with trading operations rising by 50 per cent. Traded crude oil volumes rose to 32.8 million bbls in 2023 as against 21.8 million bbls in 2022. Traded refined petroleum products dropped by 15 per cent to 1.646 million MT in 2023 compared with 1.938 million MT in 2022.
The upstream saw increase in production from 20,703 boepd in 2022 to 20,837 boepd in 2023, despite the challenges in the oil producing region. Oil production stood at 6,024bbls/day in 2023 as against 4,939bbls/day in 2022. Natural gas production stood at 14,572boe/day in 2023 compared with 15,292boe/day in 2022. NGL production was 241bbls/day in 2023 as against 472bbls/day in 2022.
The release of the 2023 results brings the company a step closer to being in line with regulatory requirements for all listed companies. It indicates that by the end of this year, Oando will be on track with its peers in reporting results thus giving confidence to shareholders and investors on the company’s current state and future.
2023 has seen Oando push forward with its growth agenda, recording positive highlights, including the signing of a Sale & Purchase Agreement (SPA) with Italian oil major, Eni to acquire one of its local subsidiaries, the Nigeria Agip Oil Company Limited (NAOC).
In addition, its clean energy arm, Oando Clean Energy Limited (OCEL) launched its electric mass transit buses in partnership with the Lagos State government, signaling that things are beginning to look up for the indigenous giant.
Group Chief Executive, Oando Plc, Mr. Wale Tinubu, said the results showed that the company has weathered the storm and on track to consolidate future growth.
According to him, despite the persistent pipeline vandalism across the Niger Delta, which continues to dampen crude production, the profit after tax of N 74.7 billion in 2023 was largely driven by increased trading volumes due to strategic global partnerships and net foreign exchange gains on the group’s foreign currency denominated assets as against losses on foreign currency denominated liabilities.
He noted that the milestone signing of the Sale and Purchase Agreement with Eni towards the acquisition of 100 per cent of the shares of NAOC Ltd, marked a pivotal moment for the company as it is poised to unlock substantial synergies in the near future.
“Our focus is now on completing the acquisition and seamlessly integrating operations to deliver exceptional value to our shareholders.
“Having weathered the storm of recent years, our latest results provide a foundation for us to consolidate and build for the future. With our planned acquisition of NAOC, we are positioned to take full operatorship and drive-up outputs, value and efficiencies.”
“Moreover, our foray into and leadership in clean energy expand our footprint as a fit and proper integrated energy company with our feet firmly planted in today’s realities and the possibilities of the future,” Tinubu said.
Nigeria had seen a decline in national oil output, precipitated by pipeline vandalism, oil theft and illegal refining, against this backdrop Oando’s Upstream operations saw average daily production increase marginally by one per cent to 20,837 boepd in 2023 vs 20,703 boepd in 2022.
Reacting to the results, shareholders had earlier expressed optimism on the performance outlook of Oando Plc.
Shareholders said the recovery, from previous streak of losses, underlined the relentless efforts of the board and management to turn around the company.
National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, described the latest earnings report of Oando as a “cheering news” to shareholders.
He said sustaining such performance would bring much joy and celebration to shareholders, urging the management of the company to improve on the performance in the next quarters.
National Coordinator, Pragmatic Shareholders Association of Nigeria, Mrs Bisi Bakare, said shareholders invest in companies to reap rewards and are always happy to see a positive turnaround in the fortunes of companies.
“I’m very glad and excited about the news. This shows that the board and management are not relenting in turning around the company to profitability. We hope the same trend will continue for the first and second quarters of 2024. We hope the 2023 profit is sustained in many years to come.
“The reason we invested is to get good returns on our investment, either through dividend or capital appreciation. So, we are happy and glad for Oando’s 2023 financial results,” Bakare said.
Chairman, Ibadan Zone Shareholders Association (IBZA), Mr. Eric Akinduro, said there were all indications that Oando has gotten out of the wood and shareholders may be in for better returns.
“It is our expectation that the trend is sustained so that the shares can appreciate for investors to enjoy capital appreciation,” Akinduro said.
