Oando expects lower earnings in half year 2016 result

Oando Plc has said is expecting lower earnings for the second quarter of 2016 due to the impact of the Naira devaluation against US dollar, resulting in unrealized foreign exchange losses.

This announcement is based on the unaudited financial statements for the period ended 30th June 2016.

Oando in profit warning sent to the Nigerian Stock Exchange (NSE) in Lagos today said, 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.

According to Oando, “As at the time of the devaluation the company had USD denominated borrowings of $261 million in our Naira dominated earnings businesses, consisting of $68 million in core loans, $89 million in bank trade facilities, $83 million in asset financing and $21 million in other payables. A circa 40 per cent 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’s noted that, “Despite the challenging operating landscape in 2016, we reiterate 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.”

It stated that, further details of the Group’s financial performance would be disclosed when the half year unaudited financial results announced and during the subsequent results conference call.