Oando losing revenue, lifting profit in 2014

Published

9 years ago

September 29, 2014

Oando, is losing sales revenue for the second year this year but the company is rebuilding profit rapidly after a huge drop last year. The petroleum company is by its second quarter result likely to remedy an unexpected 87% profit crash in 2013 and push profit to a new peak this year.

Lifting profit from the lowest level in many years to a distant new peak is likely to be the summary of Oando’s operating story in 2014. The company looks ready to beat every other listed company on exceptional profit growth this year.

The company’s group chief executive officer, Mr. Wale Tinubu seems to be getting to the breakthrough point of all his complex strategic applications that have finally launched the company into a leading energy solutions conglomerate in Africa. He is expecting even more robust financials from the $1.5 billion acquisition of ConocoPhilips’ Nigerian business, which has increased Oando’s scale of upstream operations.

Tinubu’s winning strategy this year is the use of a cost cutting approach to shield and grow profit in a falling sales revenue situation. This has given Oando the highest profit margin seen in many years. Building the biggest profit ever out of two years of declining sales revenue will be a major feat accomplished in Nigeria’s corporate arena in 2014.

The company closed its second quarter operations in June with a turnover of N194.59 billion, which is a drop of 30.6% from the corresponding period last year. Revenue growth is however expected to step up in the second half of the year. Based on the current growth rate, sales revenue is projected at N395 billion for Oando at full year. This will be a decline of 12.2% from the turnover figure of N449.87 billion the company posted in 2013. It will also mean a drop for the second year after losing 30.8% of its 2012 peak sales revenue last year.

The company achieved stable growth in turnover for three years to 2012 and lost the growth momentum last year. The full year revenue picture for this year is expected to change with the incorporation of new operating activities scheduled to commence in the second half of the year.

The company earned an after tax profit of N8.98 billion at the end of the second quarter, which is a rise of 88.6% year-on-year. This is already more than six times the full year net profit of about N1.40 billion the company reported at the end of 2013.

Based on the current growth rate, full year net profit is projected at N18.50 billion for Oando in 2014 – the highest profit figure in record. This will be an exceptional recovery/growth of 1221.4% in profit for the company – the strongest profit growth likely in the entire group of listed companies this year.

The company had lost its profit growth momentum in 2012 and profit has dropped for the second year from the peak of N14.37 billion it recorded in 2011. With the restructured operations, a change in the rise and fall pattern of profit may be expected. Caution is however required in that the company for now is building profit out of a falling sales revenue, which cannot be sustained. Oando needs to establish a track record of stable growth in sales revenue and profit.

The strength to lift profit this year is built around one major cost cutting success. Cost of sales has fallen by 42.4% to N144.05 billion year-on-year at the end of the second quarter. This is a more rapid drop than the 30.6% loss of sales revenue during the period. This means it cost the company significantly less to generate a unit of sales than in the preceding year. Consequently, gross profit margin has risen by 67.1% to N50.51 billion over the review period, lifting gross profit margin from 10.8% to 26% over the review period.

Administrative cost is the only major expenditure line that moved against the trend of declining costs with a rise of 37% to N25.20 billion. Other operating income dropped alongside sales revenue at 23.4% but a leap of 144.5% in operating profit to N23.69 billion evidences an overall cost reduction during the period.

The high growth in operating profit was moderated by net interest expenses, which surged up by 217.4% to N11.21 billion at the end of the second quarter. A mild reduction in balance sheet debts has happened in the first six months of the year but total borrowings remain huge at close to N239 billion.

Other significant changes in the balance sheet from the 2013 closing position include a jump of 112.9% in cash and bank balances, a rise of 41.4% in trade and other payables and an increase of 32.4% in trade and other receivables. Inventories also closed higher by 27.9% over the same period. The company’s cash flow position has improved with the proceeds of issue of new shares and a significant drop in net cash used for investing activities.

The company earned N1.01 per share at the end of the second quarter, up from 63 kobo in the corresponding period last year. Earnings per share this year is moderated by an increase in the volume of shares coming from a new issue. Earnings per share is projected at N2.08 for Oando at the end of 2014, a rebound from 23 kobo per share in 2013.

The company has proposed an interim dividend of 70 kobo per share for shareholders in the books of the company on 17^th November and payment is to be made on 15^th December 2014. It is also paying a dividend of 30 kobo per share for its 2013 operations with a qualification date of 30^th September and payment date of 17^th November 2014. —The Citizen

WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

Published

4 years ago

April 13, 2019

Maritime First

…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development.

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity.

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years.

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further.

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA.

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers.

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being.

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained.

Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

Published

5 years ago

March 7, 2019

Maritime First

The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

Wind Farm Vessel Collision Leaves 15 Injured

Published

5 years ago

February 20, 2019

Maritime First

…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg.

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt.

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital.

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News