Hinges reduced performance to Naira devaluation
Says current diversification plan would boost profit in Q3

In an effort to allay investors’ concerns, Oando Plc has announced an earning guidance explaining that it expects materially lower earnings for the second quarter of 2016 due to the impact of the Naira devaluation against the US dollar (“USD”) resulting in unrealized foreign exchange losses.

The announcement was based on the unaudited financial statements for the period ended 30th June 2016

According to the company, the impact of the Naira devaluation by the Central Bank of Nigeria (CBN) , expected to amount to an unrealized foreign exchange loss arising from dollar-denominated liabilities, outstanding bank trade facilities as well as vendor payables has affected its performance for the second quarter , 2016.

“As at the time of the devaluation the company had USD d denominated borrowings of $261Million in our Naira dominated earnings businesses, consisting of $68Million in core loans, $89 million in bank trade facilities,~$83 million in asset financing and $21 million in other payables.

“A circa 40 per cent devaluation in the value of the Naira against the US dollar from the bank rate of N199.00:$1.00 to N280.00:$1.00,has effectively resulted in these significant foreign exchange losses which we have prudently booked into our financial statements.

The firm, however, reiterated its commitment to reposition the Group to profitability by growing its dollar earning higher margin upstream and export trading businesses, which will not be impacted by the volatility of foreign exchange rates to the Naira.

It added that it remains confident in the diversified business model and the long term prospects for the firm’s growth in Nigeria and beyond.

Oando had recently announced a N4.1 billion Q1 profit, which tickled investors and rallied the company’s share price on the Nigerian Stock Exchange (NSE).

Oando’s reinvigorated strategy is reliant on key corporate initiatives to drive the company back to profitability and optimise its balance sheet via aggressive debt reduction and recapitalisation.

Despite the prevalent challenging operating landscape, the company reiterated in a Facts Behind the Figures session at the NSE, a desire to return the Group to consistent profitability by growing its dollar earning higher margin upstream and export trading businesses.

Commenting on the company’s confidence in its diversified business model and the long-term prospects for growth in Nigeria and beyond, the Group Chief Executive, Wale Tinubu, said: “This first quarter of 2016 demonstrated our dedication to return our business to profitability by the end of the 2016. We have implemented constructive corporate initiatives, which are driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry.

“The successful and on-going implementation of these initiatives reiterates our strategy of growth, deleverage and a return to profitability by the end of 2016. As a group we have placed our focus on growing our upstream higher margined business while still holding fundamental interests in the midstream and downstream sectors. We look forward to a rewarding year, where we solidify our aspirations and return to profitability.”