Wednesday, July 20, 2016 12:40PM/Proshare Markets
On Monday, July 18, 2016, Oando Plc issued H1’2016 earnings guidance stating that it is expected to report materially lower earnings for the period due to the impact of the Naira devaluation against the US dollar. Specifically, Oando mentioned that it has USD denominated borrowings of ~$261 million in its Naira denominated earnings businesses, and due to the 40% devaluation of the Naira (during the period in consideration) against the dollar from the rate of N199/$1 to N280/$1, this has effectively resulted in significant foreign exchange losses for the company.
With the Naira now trading at N292.25/$1 as at Friday July 15, 2016 (following CBN’s move to allow market forces determine the true value of the Naira), with a potential to further depreciate due to forex shortage, there is no doubt that this would negatively impact the company’s USD denominated borrowings the more.
Recall that in Oando’s 2015 Audited Financial Statements, Ernst & Young expressed an opinion casting doubts on the Group’s ability to continue as a going concern. Regardless of the company’s position that its restructuring efforts would help mitigate this, the earnings guidance released makes us wonder if investors truly have nothing to worry about concerning Oando.
A look at Oando’s financials in recent time revealed that the firm just turned around its negative PAT position announced in its 2014 and 2015 Auidted financial statements with N4.10 billion PAT in Q1 2016. Can the company sustain this feat?
1. Oando Plc to Report Materially Lower Earnings for Q2 2016 Due to the Impact of Naira Devaluation
2. Oando Plc: Make or Mar
3. Oando Plc to Hold 2016 AGM on Tuesday 2nd August
4. Oando Plc Key Highlights on Q4 15 and Q1 16
5. OANDO Concludes Recapitalization Partial Divestment of Equity Stake in Its Downstream Operations
6. Material Uncertainty May Cast Doubt on Oando’s Ability to Continue as a Going Concern – Ernst & Young
7. OANDO Releases Q4 15 and Q1 16 Results Declares N4.10bn PAT in Q1 SP N6.50k
8. Oando Plc Secures 5 Year N94.6 Billion Medium Term Facility with 10 Nigerian Banks
9. Oando explains what Deregulation of Petrol Price means for its Downstream Operations
10. Why Oando Plc's 2015 Audited Statements will be released on May 31, 2016
11. OANDO to acquire OER Minority Shares for a Consideration of US 1.20 per share in Cash
12. Bursa Malaysia Publicly Reprimands Quoted company for Breach of Main Market Listing Requirements
13. OANDO Notifies on Late Filing of 2015 Audited Financial Statements
14. OANDO Gives a Brief on Key Matters Impacting Its 2014 Full Year Release
15. NSE Continues its Review of the Situation of Oando Plc
16. OANDO posts N418million loss as revenue slips by 5.48 in Q3 15 - Proshare
17. OANDO Releases Q4'14, Q1'15 and Q2'15 Results, Declares N35.13bn Loss in Q2,(SP:N10.14k)