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‘Downstream challenges alleviated by COVID-19 pandemic’

By Femi Adekoya
26 August 2020   |   1:44 am
Although the downstream sector of the oil industry has been facing its margin challenges, the COVID-19 pandemic has further aggravated its concerns, especially as the government seeks to comply with production

Eterna Oil

Although the downstream sector of the oil industry has been facing its margin challenges, the COVID-19 pandemic has further aggravated its concerns, especially as the government seeks to comply with production quota for producing countries and ration available foreign exchange.

This was the view of the Chairman, Eterna Plc, Lamis Shehu Dikko, while assuring stakeholders of the company’s resilience despite the challenges posed by the pandemic.

Besides, the company reiterated its commitment to achieving its set goals and delivering excellent services to its customers and returns to its shareholders.

Dikko, during the firm’s yearly general meeting, said to achieve the feat, the company remains on course with its five-year strategic plan.

According to him, the company increased its operating retail outlet count by 17 to close the year with 32 outlets in the 2019 financial year.

“We assure you that we will pursue promising opportunities and make the most of its resources,” he added. He said the development in the global oil market including declining oil prices and a sustained cut in Nigeria’s oil production quota by the Organisation of Petroleum Exporting Countries (OPEC), has affected the operating environment of oil and gas companies.

He said other factors that affected the business environment include Central Bank of Nigeria’s (CBN’s) intervention in lending and trade policy, aimed at encouraging banks to lend to the real sector as well as its strict adherence to Foreign Exchange (FX) window access on allowable imports only.

He said his company achieved consolidated operating revenue of N229.2 billion down from N251.8 billion in 2018, and a gross profit of N4.9 billion up against N4.6 billion recorded in 2018.

“Unfortunately, we were unable to retain the earnings as a result of 44 per cent reduction in operating profit from N2.7 billion in 2018 to N1.5 billion in 2019, and almost 94 per cent increase in finance costs from N869 million in 2018 to N1.6 billion in 2019,” he said.

He said the Profit before Tax declined to N111 million in 2019 from N1.9 billion in 2018.

“We have estimated our taxes for the year at N255 million (subject to review by the tax authorities), which would lead our company to a loss after tax position of N144 million,” he said.He noted that the operating results fell short of its previous performances in the last eight years, as evidenced by the challenges currently facing the downstream oil and gas industry.

He assured its esteemed shareholders of the Board’s commitment to working assiduously to turn the tide and return of its company to profitability.

“We are currently in the middle of a pandemic brought on by the deadly coronavirus. Covid-19 has already disrupted life as we know it, infecting more than seven million people globally as at the date of this report with close to 13,000 confirmed cases in Nigeria,” he added.

The Managing Director, Eterna Plc, Mahmud Tukur, said the company’s strategic decision is to be Africa’s preferred energy company, reaffirming its unwavering commitment to consistently provide high quality products and services that meet and exceed the needs, operational requirements and expectations of its customers, thereby ensuring an overall achievement of a sustained and profitable growth for the company.

Also speaking, the Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie, commended the management of the company for their efforts in keeping a positive balance sheet during the last financial year ended, December 2019.

Okezie said the Company’s operation was affected with the harsh operating environment, which led to decline in profitability, and it will not be wise for the Company to pay dividend at this period.

He urged the new company’s management to make investments in the company worthwhile by ensuring that they maintain a steady increase in turnover volume, which will enhance dividend payment by the company.

Also, the Founder of Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, applauded the management performance for 2019.

On the outgoing MD/CEO of Eterna, Nwosu said Tukur has done well by taking the Company to profitability with a steady growth in earnings per share, net profit and dividend pay-out. He urged the new management to put in their best in growing the business in line with the Company’s vision.