Oando Plc Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchanges, has issued a profit warning to its shareholders that it expects to report materially lower earnings for the second quarter of 2016.
The company, according to its Head, Investor Relations, Tokunboh Akindele , in a statement on Monday, this is due to the impact of the Naira devaluation against the US dollar, which it said resulted in unrealized foreign exchange losses. This announcement is based on the unaudited financial statements for the period ended 30th June, 2016.
“The impact of the Naira devaluation by the Central Bank of Nigeria (CBN) is expected to amount to an unrealized foreign exchange loss arising from USD denominated liabilities, outstanding bank trade facilities as well as vendor payables.
“As at the time of the devaluation of USD, the company had denominated borrowings of $261 million in our Naira dominated earnings businesses, consisting of $68 million incurred loans, $89 Million in bank trade facilities, $83 million in asset financing and $21 million in other payables.
“A circa 40% 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 company, however, said that despite the challenging operating landscape in 2016, “We reiterated our focus of returning the Group to profitability by growing our dollar earning higher margin upstream and export trading businesses, which will not be impacted by the volatility of Foreign Exchange rates to the Naira.
“We remain confident in our diversified business model and the long-term prospects for growth in Nigeria and beyond. Further details of the Group’s financial performance will be disclosed when the Half Year unaudited financial results are announced and during the subsequent results conference call”, the company said.