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Forte Oil Plc has assured the investing public of increase in Return on Investment (ROI, just as it said that it will continue to maintain its policy on consistent dividend payment.
The company said it is determined to further enhance and improve its operating margins, diversify revenue base, as well as pursue focused mergers and acquisitions, and also leverage on strategic partnerships and joint ventures to drive its operations.
Speaking to the market community during the company’s fact behind the figure on its financial position for the half year 2017, on Friday, the Group Chief Executive Officer, Mr. Akin Akinfemiwa, said the company’s proactive investment as a energy solution provider has continued to yield positive results.
He said notwithstanding fluctuation in global oil prices that impacted negatively on oil product importation/sales, and coupled with exchange rate differentials in the domestic economy, the company was able to navigate the challenging times to grow its financial margins.
According to him, “in Q2 FX scarcity eased with net inflows improving availability especially for the importation of deregulated petroleum products improving supply and reducing prices.
“The lubricant business recorded a 23percent growth in revenues tempered by a 58percent in Cost of Sales as a result of rising cost of Base Oils and other blending inputs resulting in a 45percent dip in gross margins Year-on-Year.
“There was a 40percent dip in other income due to reduced throughput income as a result of decreased product availability at our Terminals which also affected the freight income. There was also no crude lifting contract whch contributed N158 million in 2016.
Akinfemiwa who explained that increase in finance cost was attributable to interest payment on bank loans and overdraft as a fall out of long overdue subsidy payments, added that the power segement was boosted by increased capacity from 414mw to 435mw utilization from improved gas supply and pricing leading to a 284 percent increase in revenue Year-on-Year.
Giving further operational highlights on the period under review, the group CEO said specifically that, for H1 2017, there was a 7percent drop in gross margin YoY due to increased plant amortation cost as a result of the completion of the $93million major overhaul.
“Gas supply to GPP remains steady, power evacuation to the grid has been consistently high, receivables cycles shorter and amounts received have seen a 66percent increase to 88 percent from 22 percent.
The period under review also saw resuscitation of suspended contract, signing of new production chemical supply contracts, leading to a 34percent revenue growth from production chemicals, just as cost of production dropped 4 percent, while gross margin increat 180 percent.
A further x-ray of the company’s H1 income statement showed that revenue dipped by 22 percent from N84’4 billion in H1 2016 to N65.6 billion in H1, 2017 as a result of marketers inability to import petroleum products due to paucity of foreign exchange and unfavourable landing price for PMS.
“Increased capacity utilization and energy sent to National Grid from the Geregu Power Plant and 56 percent increase in energy tarrifs by NERC. PAT increased by 84 percent from N2.2 billion in H1, 2016 to N4.1 billion in H1, 2017 as a result of increase in finance and tax expenses.
Meanwhile, when market operators (stockbrokers) raised concerns on the volatility in the prices of the company’s stock, the non payment of dividend, its property on Broad street, and capital raising to backroll some of the company’s lofty growth drive, Akinfehimiwa said the company with high stake on sound corporate governance and interegy, will at all times leave above board and not compromise on its high ethical standard.
He explained that, prices of stocks are determined by supply and demand in the market, noting that the company with consistent dividend payment policy did not only pay dividend in 2015, and that the company’s huge investment in power plant and operational demands needs all funds available to continue to thrive, hence the positive financial delivery coming from the investment in the period under review.
He added that, the company is mindful of its former head office building on Broad street, explaining that the company has continued to put it in good use and that its entering into an agreement with a company last Saturday to manage it, even as proceed is expected to add value to the company’s bottom-line.
He said with the window to raise fund from the capital market still available, haven received shareholders nod at its General Meeting in 2016, the company will consider either debt or equity instrulment in raising funds for its business diversification.
