Oando re-strategises to cushion effect of FX volatilities
90% of earnings to become dollar denominated
Oando Nigeria Plc has announced that it has adopted a holistic strategy that would help mitigate impairments resulting from foreign exchange (FX) volatilities in its operations.
To this effect, the company disclosed that 90 per cent of its earning would subsequently focus on dollar denomination to cushion the effect of volatilities while 10 per cent would remain in naira.
The Managing Director of the company, Wale Tinubu, while addressing stockbrokers during the company’s facts behind the figures at the Nigerian Stock Exchange (NSE), in Lagos, on Thursday, explained that the completion of this restructuring exercise would help the company sustain its growth profile and boost profitability.
Besides, the firm also unfolded plans to seek approval from the Federal Government for the refurbishment of one or two refineries.This, he said, would enable Nigeria to end fuel importation, stressing that the company would take advantage of its indigenous status by participating in the Federal Government bid.
According to him, Oando is besieged with liquidity constraints, devaluation of the naira, and a slump in oil earnings due to low oil prices intensified by the insurgency in the Niger Delta.
He pointed out that that 2016 was a challenging year for companies due to foreign exchange challenges, but added that the management’s proactive timely execution of its restructuring programme of growth in upstream division restored the firm to profitability.
Furthermore, he explained that some divestments embarked by the company during the period under review resulted in a net debt reduction of $125 billion, adding that the company’s return to profitability was due to focus on dollar denominated earnings.
He said the company’s performance for the financial year ended Deceber 31, 2016 posted a profit after tax of N3.5 billion against a loss after tax of N47.6 billion posted in the preceding period of 2015.
The result also showed that Oando posted a turnover of N569 billion against N380 billion recorded in the comparative period of 2015, an increase of 49 per cent. Its net debt reduced by 35 per cent to N230.6 billion in contrast with N355.4 billion posted in 2015.
Tinubu also disclosed that the company would invest in the acquisition of NIPP grid connected power utilities in the current financial year, and would in 2018, commence phased development of gas distribution system in Tema industrial area Ghana.
Also speaking at the event, the NSE Executive Director, Capital Market, Haruna Jalo-Waziri, urged the firm to ensure that it complies with good corporate governance, noting that the Exchange would continue to provide the needed platform for quoted companies to excel.
Jalo-Waziri commended Oando for coming for the facts behind the figures, adding that timely and accurate information aid investors in making the right investment decision.