By Josiah Nkemakolam
Oando Plc delivered another year of profitability in 2025 despite a decline in revenue, demonstrating improved operating resilience following the transformational acquisition of Nigerian Agip Oil Company (NAOC). However, beneath the earnings growth lies a balance sheet still burdened by negative equity, rising short-term debt obligations and mounting trade payables, highlighting the work that remains before the energy group can claim a full financial turnaround.
The company’s audited financial statements for the year ended December 31, 2025 show that group profit after tax stood at N204.81 billion, only slightly below the N220.12 billion recorded in 2024. Profit attributable to shareholders came in at N204.01 billion, while earnings per share improved significantly to N23 from N18 in the previous year, reflecting the impact of changes in the company’s share structure.
Revenue from contracts with customers declined by 22.2 percent to N3.18 trillion from N4.09 trillion in 2024. The decline came as cost of sales also moderated, falling to N3.18 trillion from N3.99 trillion a year earlier. Despite the reduction in production revenues, Oando’s ability to maintain profitability points to stronger cost management and significant gains from non-core income and impairment recoveries.
The company reported a gross loss of N2.76 billion, compared with a gross profit of N93.34 billion in 2024, illustrating the pressure on its core trading operations. However, this weakness was more than offset by other operating income of N203.79 billion, while a substantial N441.48 billion reversal of impairment on financial assets dramatically boosted earnings.
Administrative expenses also fell sharply to N399.25 billion, compared with N548.31 billion in the previous year, helping operating profit settle at N240.96 billion.
Finance costs remained one of the company’s biggest challenges. Net finance costs rose to N106.66 billion from N188.64 billion in 2024 after finance income surged to N288.03 billion, supported by significantly higher interest earnings. Nevertheless, gross finance costs climbed to N394.69 billion, reflecting the high cost of servicing borrowings in Nigeria’s elevated interest rate environment.
Profit before tax declined from N383.82 billion in 2024 to N135.76 billion in 2025. However, the company recorded an income tax credit of N69.05 billion, compared with a tax expense of N163.70 billion in the preceding year, allowing net profit to remain above N200 billion.
Beyond the income statement, Oando’s balance sheet presents a more complex picture.
Total assets expanded by almost 16 percent to N7.45 trillion, up from N6.43 trillion a year earlier. The increase was largely driven by a surge in current assets, particularly trade receivables, contract assets and cash balances.
Trade and other receivables climbed to N2.19 trillion from N750.26 billion, representing one of the largest increases on the balance sheet. Cash and cash equivalents nearly doubled to N439.88 billion, while short-term investments increased more than tenfold to N29.58 billion.
Property, plant and equipment remained Oando’s largest asset class at N2.93 trillion, although this was slightly lower than the N3.17 trillion reported in 2024 due mainly to depreciation and asset movements.
Yet despite the larger asset base, shareholders’ funds remained firmly in negative territory.
Total equity deteriorated from negative N360.98 billion in 2024 to negative N566.97 billion in 2025. The decline was largely driven by the recognition of N378.79 billion in treasury shares and the creation of a capital distribution reserve of N77.96 billion, both of which significantly reduced equity.
Retained losses also improved substantially, narrowing from negative N292.50 billion to negative N88.49 billion, reflecting the impact of current-year profits. However, the improvement was insufficient to offset the accounting impact of treasury share transactions and other reserve movements.
Negative equity remains one of the most significant concerns for investors because it indicates that total liabilities continue to exceed total assets attributable to shareholders.
Indeed, total liabilities increased to N8.01 trillion, exceeding total assets of N7.45 trillion.
Current liabilities rose sharply to N6.60 trillion from N4.42 trillion in 2024.
Trade and other payables jumped by almost 60 percent to N4.08 trillion, suggesting that suppliers and creditors are providing substantial financing support to the business. Current borrowings also increased to N2.08 trillion, compared with N1.31 trillion a year earlier.
On a more positive note, long-term borrowings reduced significantly from N1.46 trillion to N616.52 billion, indicating that Oando has either refinanced or repaid a considerable portion of its long-term debt obligations.
The company’s cash flow statement provides further evidence of improving operational stability.
Net cash generated from operating activities reached N32.33 billion, representing a major turnaround from the N535.28 billion net cash outflow recorded in 2024.
Operating cash generation before interest and taxes stood at N258.29 billion, showing stronger underlying business performance despite the decline in reported revenue.
Investing activities generated a positive net inflow of N97.64 billion, compared with a substantial outflow of N869.28 billion in 2024. The previous year’s figures had been heavily impacted by the acquisition of NAOC, which required significant investment.
During 2025, Oando spent more than N102 billion on property, plant and equipment while investing another N32.60 billion in intangible assets, demonstrating continued commitment to expanding and modernising its upstream asset portfolio.
Financing activities contributed a further N165.73 billion in positive cash flow, supported by fresh borrowings of more than N1.02 trillion, although repayments of N863.14 billion moderated the overall increase in debt.
Overall, cash and cash equivalents rose to N422.88 billion, almost three times the N155.35 billion reported at the end of 2024 after adjusting for bank overdrafts.
At the parent company level, the numbers present an even stronger earnings story.
Oando Plc, excluding subsidiaries, reported profit after tax of N468.59 billion, more than four times the N111.81 billion recorded in 2024. The improvement was largely supported by higher other operating income and stronger returns from investments.
Nevertheless, the parent company also remained in negative equity of N300.04 billion, although this represented an improvement from negative N348.27 billion in the previous year.
Perhaps the most striking aspect of Oando’s 2025 financial performance is the contrast between its income statement and balance sheet.
On one hand, the company continues to generate robust profits, stronger operating cash flows and improved liquidity following the completion of one of Nigeria’s largest indigenous oil asset acquisitions. The reversal of impairment charges, reduction in administrative costs and stronger finance income all contributed positively to earnings.
On the other hand, the balance sheet remains heavily leveraged. Rising current liabilities, negative shareholders’ funds and substantial trade payables continue to underscore the financial challenges associated with integrating large upstream assets while operating in an environment characterised by high financing costs and foreign exchange volatility.
For investors, the key question is whether the stronger cash generation witnessed in 2025 can be sustained long enough to rebuild equity, reduce leverage and improve the company’s capital structure.
If Oando succeeds in converting its enlarged asset base into consistently stronger operating cash flows while reducing its dependence on short-term borrowings, the company could be well positioned to unlock greater shareholder value over the coming years.
For now, however, the 2025 financial statements tell the story of a company that has largely restored profitability but is still navigating the difficult journey from earnings recovery to long-term balance sheet strength.