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Oando record profit loss in Q1

Oando Nigerian Plc announced Wednesday that its pre-tax profits for the first quarter were hit because it could not pass on the effect of a … Continue reading Oando record profit loss in Q1


Oando Nigerian Plc announced Wednesday that its pre-tax profits for the first quarter were hit because it could not pass on the effect of a 50 percent fuel subsidy cut this year to consumers.

The energy firm said profit before tax tumbled 15 percent to $32 million in the first quarter compared to a year ago. That was despite the fact that revenues inched up 38 percent to $1 billion.

A statement listed “higher cost of petroleum products during the period compared to the same period in 2011, reflecting the reduction in subsidy,” as a major cause of the fall in profits.

It added that an “increase in PMS (petrol) pump price from N65 to N97 per liter though the 50 percent increase did not pass (the increased cost) through fully due to product scarcity and lost sales … (from that) scarcity.”

Shares in the company, down 71 percent in the last 12 months, fell to an 8-year low of N14.99 after the results were released on Wednesday, which followed the release on Monday that 2011 net profit declined 76 percent to N3.44 billion ($21.61 mln).

Nigeria cut petrol import subsidies in January in an effort to control the spiralling costs of a scheme that represents a huge state handout to fuel importers.

The government had initially planned to axe subsidies completely, but was forced to partially reinstate them after a public outcry.

Oando, which holds a secondary listing in Johannesburg, also said administrative and selling expenses, including foreign exchange losses, hurt profits.