In spite of its strategic acquisitions of ConocoPhillips and Medal Oil last year, Oando Plc which reported a dismal performance in respect of its third quarter 2015 financial profile, may not pay dividends to shareholders at year-end, Business Hallmark has uncovered.
Similarly, its share price on the bourse slipped further to N5.85 kobo per share from its opening price of N17.50 kobo per share at the beginning of the year, thereby recording a 66.57% loss of value to shareholders.
The poor result made investors to maintain a prolonged negative sentiment towards this stock as it hit an all time low through the active sell-down trend.
Shareholders of the company are not expected to get dividend or bonus as a result of the loss in the third quarter 2015 financial profile.
One of the simplest ways for companies to communicate financial well-being and shareholders’ value is the payment of dividends. Dividends are those cash distributions that many companies pay out regularly to shareholders from earnings.
It sends a clear message about the future prospects and performance of the company.
A company’s willingness and ability to pay steady dividend over time, and its power to increase them, provide a good clue about its fundamentals. A dividend is therefore, allocated as a fixed amount per share, with shareholders receiving a dividend in proportion to their shareholdings.
For the company, paying dividends is not an expense; rather it is the division of after tax profit among shareholders.
A cursory look at its financial performance in the third quarter 2015 was dismal and was responsible for the downward trajectory of its stock price as it reported a loss of approximately N184 billion in its profit after tax.
The result is not capable of sustaining dividend pay-out in the short or long term.
The company is not expected to borrow money in order to pay dividend.
Its revenue dropped by -5.48% to N95.784 billion compared to N101.334 billion same period in 2014.
However, cost of sales went up significantly by +47.05% to N54.725 billion compared to N37.215 billion in the same period in 2014 while Gross Profit slumped from N64.119 billion in the preceding year to N41.059 billion, translating to a decrease of -35.96%.
Loss before tax was (N47.647 billion) compared to N5.165 billion previously and Loss after tax decreased by -546.74% to (N47.801 billion) compared to N10.700 billion recorded in 2014. Earnings per share also slide from 120 kobo per share to (418 kobo) per share.
Analysts and a stockbroker, who want to remain anonymous, said the loss incurred was as a result of fund diversion by the company to do other things which were not beneficial to the company’s wellbeing.
All efforts to get the firm’s reaction on the third quarter 2015 result were unsuccessful or visibly ignored.
Oando plc (formally Unipetrol Nigeria Plc) commenced business operations as a petroleum marketing company in Nigeria under the name ESSO West Africa Inc., a subsidiary of Exxon Corporation of USA in 1956.
In 1976, the Nigerian Government bought Esso’s interest and thus owned the company 100%.
In 1991 the company converted to a public limited liability company and was quoted on the Nigeria Stock Exchange (NSE) in 1992.
Today the company operates 341 retail outlets throughout Nigeria, 5 depots with a capacity of 40 million litres, 5 LPG plants with a capacity of 750 metric tonnes, 3 aviation fuel depots in Lagos, Abuja and Kano, 2 bitumen plants with a capacity of 12,000 metric tonnes, a lubricant blending plant and numerous retail outlets in Ghana, Togo, Sierra Leone, Benin and Niger.
At the presentation of the 3rd quarter 2015 result, Mr. Pade Durotoye, CEO said “In the face of lower and increasingly volatile crude oil prices, we continue to carefully manage costs and execute low Capex activity that optimize our overall production base whilst benefiting from our hedging strategies,”.
“Despite the unfortunate operational incidents that temporarily impacted production in July, Oando delivered total production levels of 4.9 MMboe, an average production level of 53,169 boe/day thanks to quick bypass and recovery systems executed by the Operator and our diverse portfolio of producing assets.
We remain committed to working with our joint venture partners to further consolidate the assets we acquired last year and optimize production, whilst also continuing to implement cost reduction strategies and prudently manage our balance sheet.”
Shares in issue =12,034,618,894
52 Weeks High = N19.96 k
52 Weeks Low = N5.85 k
52 Weeks Change = 70.69%
Last Price = N5.85 k
P/E Ratio = -0.38
EPS = -15.28035
BY DENNIS OKONNE