Oando’s profit dips 18.5% in H1’19 on increased administrative expenses
Oando Plc, one of Africa’s largest integrated energy solution providers, posted a declined profit in the first half of 2019 driven by higher cost of sales and record-high administrative expenses.
In the first six months of the year, the oil and gas firm recorded a net profit of N7.17 billion, a 18.48 percent decline from N8.49 billion recorded in the corresponding period of 2018, no thanks to ad
ministrative expenses that jumped 38.63 percent to N53.7 billion in the period.
Further checks revealed that the administrative expenses incurred by Oando was triggered by its activities between April and June 2019 as expenses within the period accounted for more than 72 percent of the total administrative expenses for half-year 2019.
Besides this, despite the oil and gas company recording a 5.74 percent surge in its top line in the first six months of this year to N315.41 billion, it spent N273.52 billion on cost of sales, representing a 10 percent increase from N246.3 billion recorded in the corresponding period of 2018. This weighed on its gross profit to N41.89 billion as against N51.01 billion recorded a year earlier.
As a result of these costs, Oando’s operating profit plunged from N13.84 billion to N1.17 billion, while its operating margin, a profitability indicator that measures how much profit a company makes on a naira of sales after accounting for all costs, weakened to 0.37 percent in the review period from 4.66 percent.
Oando recorded a pretax loss of N17.28 billion in the first half of 2019 from a profit before loss of N2.26 billion in the same period of 2018. However, an income tax credit of N24.45 billion accrued by the firm concealed its losses, making it record a post- tax profit N7.17 billion.
Oando gained 3.75 percent on the Nigerian Stock Exchange (NSE) Friday to close at N3.95 per share. The company’s stock has lost 21 percent of its market value since the start of the year amid controversy with the apex regulator of the capital market, the Securities and Exchange Commission (SEC).
Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar