Forte Oil’s sales drop by 25.3% in Q3

In from Success Allantee . . .

Nigeria’s highest-price oil and gas stock, Forte Oil Plc recorded a steep decline in sales in the third quarter but the integrated energy group fell back on internal financial management to bolster the bottom-line.

Interim report and accounts of Forte Oil for the period ended September 30, 2015 released at the weekend showed that profit before tax inched up by 1.63 per cent while profit after tax rose marginally by 6.69 per cent, after the company reduced net finance cost by 74.4 per cent. Gross and operating profits had dropped by 2.37 per cent and 12.1 per cent respectively.

Group turnover dropped to N91.62 billion by September 2015 as against N122.58 billion in the comparable period of 2014. Gross profit dropped from N13.29 billion to N12.98 billion. Operating profit also declined from N6.35 billion to N5.58 billion. Net finance cost however improved from N1.15 billion to N292.72 million, providing cushion for the hard-pressed bottom-line. Consequently, profit before tax inched up from N5.20 billion to N5.29 billion while profit after tax increased from N4.02 billion to N4.28 billion.

The group’s total assets dropped to N131.26 billion in September 2015 compared with N139.24 billion recorded by the year ended December 31, 2015. Shareholders’ funds however improved by 3.69 per cent from N44.33 billion in December 2014 to N45.97 billion by September 2015.

Analysts said the constrained earnings might affect the full-year performance of the company. Forte Oil had distributed N2.7 billion in cash dividends and 216 million ordinary shares of 50 kobo as bonus shares for the 2014 business year. Shareholders received a dividend per share of N2.50 and bonus shares of one share for every five ordinary shares held.

Group managing director, Forte Oil Plc, Mr. Akin Akinfemiwa, recently said the company planned to raise additional capital to boost its balance sheet and support the growth of the company over the long-term.

He said Forte Oil would also consider merger and acquisition with partners with same similarities with its corporate governance strategy.

According to him, the supplementary capital raising exercise would involve both equity and debt issues and the net proceeds of the new issues would be used to bolster the company’s working capital and enhance the overall balance sheet.

Read also: Forte Oil eyes merger, acquisition

“There is an ongoing plans and commitment with potential investors to inject additional capital through debt or equity within the next few weeks. This, we believe, would significantly impact our negative working capital and also shore up our shareholders funds,” Akinfemiwa said.

He said the outlook for the company remains promising pointing out that Forte Oil had had entered into strategic partnership and alliances with technical partners to participate in the proposed Federal Government sale of marginal oil fields and divestment of International Oil Companies (IOC) investment in local oil blocks.

He added that the company would optimise opportunities from its real sector assets to grow complimentary businesses which would ultimately increase its bottom line while it also plans to optimise its distribution channel through focusing on retail network optimisation and strategic acquisition of prime retail sites.

According to him, the company would improve operating margins and diversify revenue base by focusing on high margin products such as lubricants and expanding the Geregu power plant assets with additional 21 mega watts.

He said that the company would diversify into the upstream space through profitable of upstream assets and harness partnerships with quick service restaurants, financial institutions and telecommunications firms.

RippplesNigeria …without borders, without fears

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now