According to the Group’s audited financial statement for the full year of 2023, revenues increased from N1.99 trillion in 2022 to N2.84 trillion in the current year, reflecting a 43% growth in revenue from contracts with customers.
The financial performance of Oando Group during this period was notably affected by high sales costs, which consumed an overwhelming 97% of total revenues. The cost of sales rose from N1.91 trillion to N2.76 trillion in FY 2023.
Key Highlights of the result
Revenues reached N2.84 trillion, reflecting a 43% increase year-over-year. The cost of sales amounted to N2.76 trillion, up by 45% compared to the previous year. Gross profit stood at N85.02 billion, marking an 8% rise year-over-year. Other operating income surged to N399.98 billion, a remarkable increase of 1,304% year-over-year.
Administrative expenses totaled N261.35 billion, which is a 218% increase year-over-year. Operating profit was reported at N218.3 billion, showing a significant growth of 961% year-over-year. Finance costs were N133.38 billion, up 37% year-over-year, while finance income reached N16.9 billion, reflecting a 7% increase year-over-year. The net finance cost was N116.47 billion, representing a 30% rise year-over-year.
Profit before tax was recorded at N102.97 billion, an increase of 267% year-over-year. The income tax expense amounted to N42.7 billion, which is a 120% increase year-over-year. Finally, the profit for the year was N60.27 billion, indicating a 174% increase year-over-year.
The company demonstrated substantial growth in both revenue and profitability, with revenues climbing by 43% year-over-year (YoY) to N2.84 trillion. However, the cost of sales escalated at a quicker rate of 45%, resulting in a modest gross profit growth of 8% YoY, amounting to N85.02 billion, primarily due to significantly increased inventory costs.
A notable highlight was the extraordinary increase in other operating income, which surged by 1,304% to N399.98 billion, greatly contributing to the overall profit enhancement. This was driven by foreign exchange gains of N388.02 billion recorded during the period, marking a 1,079% YoY increase compared to the same timeframe in 2022.
Despite the rise in operating income, administrative expenses also experienced a sharp increase of 218% YoY, reaching N261.35 billion. This rise in expenses partially mitigated the gains; however, operating profit still soared by 961% YoY to N218.3 billion, fueled by both increased revenue and the substantial growth in other operating income.
Finance costs increased by 37% to N133.38 billion, while finance income saw a modest rise of 7%, resulting in a net finance cost increase of 30% YoY. Despite these escalating financial expenses, the company achieved a profit before tax of N102.97 billion, reflecting a remarkable 267% YoY increase.
Oando Plc experienced notable advantages from the substantial depreciation of the Naira in 2023, as its operations are primarily within a dollar-denominated sector. Without this favorable currency shift, the company would likely have faced another year of losses similar to those in 2022.
In terms of crude oil and gas production for the year ending December 31, 2023, Oando Plc achieved an average total production of 23,258 barrels of oil equivalent per day (boe/day), reflecting a 12% increase from the 20,703 boe/day recorded in 2022.
Crude oil output saw a significant rise of 26%, reaching 6,211 barrels per day, while natural gas production also increased by 10%, totaling 16,808 boe/day. Conversely, natural gas liquids (NGLs) experienced a decline of 49%, averaging 239 barrels per day compared to 472 barrels in the prior year.
The Chief Executive Officer of the company, Wale Tinubu, commented on the company's performance, stating, "In spite of the operational challenges posed by security issues and ongoing pipeline vandalism in the Niger Delta, we recorded a profit after tax of N60 billion. This achievement was supported by the strength of our global trading partnerships, a 12% increase in overall production, and favorable exchange gains from our foreign currency assets."
He also noted that the recent acquisition of NAOC Ltd represents a significant milestone, greatly enhancing our reserves and infrastructure. The company aims to build on its 2014 acquisition of ConocoPhillips’ Nigerian unit, which is in line with its strategy to expand reserves and production by acquiring assets from international oil companies that are exiting the market.