Table of Contents
Key Points
- Oando Plc reported a 44% drop in profit for H1 2024, falling to N62.6 billion ($38 million) due to exchange rate challenges and operational disruptions from sabotage.
- Despite the decline in profit, Oando’s revenue increased by 51% to N2 trillion ($1.2 billion), driven by favorable exchange rate impacts and higher crude oil volumes.
- Independent auditors expressed concerns about Oando’s financial health, citing a N216.2 billion ($131.4 million) comprehensive loss and highlighting a N3 trillion ($1.8 billion) funding gap for 2024.
Oando Plc, a leading indigenous oil company, has reported a 44-percent decline in profit for the first half of 2024, dropping from N112.45 billion ($68.4 million) in H1 2023 to N62.6 billion ($38 million). This profit decline comes despite a 51-percent increase in revenue, which rose to N2 trillion ($1.2 billion) from N1.3 trillion ($790.2 million) in the same period last year. The company attributed its profit drop to increased administrative costs driven by higher exchange rate translations and rising net finance costs, as outlined in its unaudited H1 2024 financial results filed with the Nigerian Exchange Limited.
Challenges impacting Oando’s profitability
Group CEO Wale Tinubu acknowledged the difficulties Oando faced, particularly sabotage and theft in the Niger Delta, which disrupted production. These challenges resulted in frequent shutdowns and reduced output. Tinubu noted that despite these setbacks, Oando achieved a profit after tax of N62.6 billion. He highlighted that the company has implemented production-enhancing initiatives, resulting in a 36-percent increase in output following its acquisition of new assets.
Independent auditors raise concerns
Oando’s 2023 audited financial statements also pointed to significant financial challenges. While the company posted a N60.28-billion ($36.6 million) profit after tax for the year, independent auditors raised concerns about Oando’s ability to continue as a going concern, citing a negative asset position and funding shortfalls.
In 2023, the company recorded a comprehensive loss of N216.2 billion ($131.4 million), worsening from N41.7 billion ($25.4 million) in 2022. As of Dec. 31, 2023, Oando’s liabilities exceeded its assets by N469.2 billion ($285.2 million), leading to net liabilities of N460.1 billion ($279.7 million). Auditors emphasized the importance of successful debt refinancing and addressing a projected N3-trillion ($1.8 billion) funding gap by the end of 2024. Concerns were also raised regarding transactions involving loans and forex forward contracts, questioning transparency in corporate activities.
