With an end to Nigeria’s worst recession in two decades buoyed by improved performance of oil, agriculture, manufacturing and trade sectors, the economy is well on its way to a full recovery. In September 2017, the National Bureau of Statistics (NBS) validated that the country has exited the recession with a growth of 0.55% in the second quarter of 2017. This gradual recovery is evident in the financials of companies in various sectors of the economy.
An analysis of the third quarter (Q3) 2017 results of oil and gas companies operating in Nigeria reveals a steady increase in earnings. Seplat made its first net profit in 2017 US$22.3 million, Exxon Mobil increased its earnings by 84% to US$11.3 billion compared to US$6.2 billion in YTD 2016 while Schlumberger announced a 6% increase in revenue to US$7.9billion.
A comparative review of Oando’s financials shows positive performance across all financial indices, turnover increased by 16% to N383.5 billion from N329.9 billion in comparative period of 2016, gross profit increased by 148% to N71.2 billion from N28.6 billion while profit-after-tax increased by 120% to N7.1 billion from a loss of (N35.8 billion) in Q3 2016.
The economic recovery is also evident in the third-quarter results of the financial sector. Access Bank declared N365 billion earnings, a 33% increase from N275 billion in same period in 2016 while FBN Holdings declared N45.8 billion, up by 5.2% from N417.4 billion in Q3 2016 amongst others.
Commenting on the results Wale Tinubu, Group Chief Executive, Oando PLC said “After five consecutive quarters of contraction, Nigeria’s official exit from the recession buoyed by improved performance in the oil, agriculture, manufacturing and trade sectors of the economy is laudable news. The continued increase in oil prices to a 2017 high of $58 in September, coupled with ongoing peace efforts in the Niger Delta have significantly impacted our 4th successive profit declaration.”
Oando continues to keep to the promise it made to shareholders during its 39th annual general meeting in 2016 with the declaration of its fourth consecutive profit. The company was proactive in its approach to cushion the effect of the oil downturn by immediately implementing its strategic growth initiatives.
Further commenting on the company’s results Wale Tinubu said; “Our third-quarter financials are reflective of the success of our strategic initiatives of Growth through our dollar earning upstream portfolio; Deleverage through recapitalization and asset divestments and the expansion of our oil export trading business. The proceeds from our business restructuring have been successfully used in improving our balance sheet with a reduction of N21 billion in our net debt position from N230.6 billion as at December 2016 to N209 billion today.’’
Oando’s results defies the speculation of many who watched the company and its management come under scrutiny in the past months. It also comes as a relief to aggrieved shareholders who have in the past months expressed their dissatisfaction on the damage the SEC probe caused to brand value and the Company’s share price.
However, these result prove the company can look forwards to an optimistic future. In 2015 Oando concluded the recapitalization of its downstream business with a consortium of Helios Investment and Vitol Group for US$210 million. The partnership reinvigorated Nigeria’s downstream sector to create one of Africa’s largest downstream operations. Oando further divested its midstream business now known as Axxela to Helios partners for US$115.8 million to increase its gas footprint.
Speaking on the future of the company, Wale Tinubu said; “Despite prevailing headwinds, we continue to create value as seen in our improved performance four quarters in a row and remain confident about the resilience of our business model.’’