‘Forte Oil’s Diversification is Yielding Positive Results’

The Group Executive Director, Finance and Risk Management, Forte Oil Plc, Mr. Julius OmodayoOwotuga has said that the diversification strategy of the company is yielding positive results.

Speaking to journalists on the operations of the company and future prospects in Lagos recently, Omodayo-Owotuga said investors would reap higher returns going forward because the diversification has assisted to hedged the company against headwinds that may come up.

According to him, the company, which started operating with major focus on the downstream sector, is now a significant player in the upstream and power sector, with vision to become a leader.

He said the well diversified nature of the company’s operations, its strong corporate governance and future prospects have attracted the stock to many foreign investors.

Omodayo-Owotuga said: “Our decision to move into upstream and power is actually paying off. In 2016, the power business that contributed nine per cent at revenue level, contributed about 20 per cent in terms of gross profit. This tells you how strong the figures are coming in from the power business. Our power business is contributing a lot and the most profitable within the group. Next is the upstream in terms of profitability and it is improving significantly.”

Speaking on the company’s strategy going forward, the ED said Forte Oil has five pillars, saying that number one pillar is to deepen its footprint in high margin businesses.

“Within our space there are some products that have high margin and the number one is lubricants in the downstream business and we intend to grow that area. We want to focus on LPG and that is why we spent so much money on revamping our LPG facilities in Apapa. We are also working on our LPG facilities in Abuja and Kano. Another pillar is to strengthen our balance sheet by raising more funds through debts and equities. This will reduce interest we pay and enhance our profitability. Another pillar is diversifying our revenue base. We are looking at upstream; we want to buy assets that are right for us and at the right price. We also want to focus on mergers and acquisitions. The only way to do better in the downstream is to do high volume. We will be growing our business organically and inorganically. In a similarly vein, we want to optimise our distribution channels,” OmodayoOwotuga stated.

He disclosed that the company has approached the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to seek approval for the proposed N20 billion fresh fund raising.

“We said to ourselves, because of the margin in downstream business, we cannot continue to use only debt. We have to bring in additional equity and we have started the process,” he said.