Yemisi Izuora
Oando Plc, is considering applying strong financial management and discipline to sustain growth seen in Q1, 2025 results.
The firm reported a profit of ₦113.06 billion for the first quarter (Q1) ended March 31, 2025, a strong rebound from its previous year’s Q1 profit of ₦59.35 billion.
This represents a 90.4 per cent year-on-year increase, largely driven by a significant tax credit and improved finance income, despite reporting an operating loss.
The company’s ability to grow core revenue while maintaining cost discipline will be crucial to sustaining long-term shareholder value.
Oando remains a key player in Nigeria’s energy sector, and while the Q1 figures show resilience, operational improvements will be necessary to solidify its recovery trajectory.
According to the unaudited consolidated financial results released by the energy giant, revenue for the period rose slightly to ₦932.57 billion, up from ₦915.42 billion in Q1 2024.
However, the company experienced a decline in gross profit margin due to elevated cost of sales, which although lower year-on-year at ₦847.15 billion (from ₦884.01 billion), still exerted pressure on profitability.
Despite the revenue increase, Oando reported a substantial operating loss of ₦120.34 billion in Q1 2025, compared to an operating profit of ₦117.20 billion in the same period last year. This was primarily attributed to an operating loss of ₦301.90 billion, contrasting sharply with the other operating income of ₦248.06 billion in Q1 2024.
The company did not specify the cause of the operating loss but it may be linked to valuation adjustments or non-cash write-downs.
Administrative expenses stood at ₦86.15 billion in Q1 2025, a 45.8 per cent decline from the ₦158.90 billion reported in Q1 2024. This drop suggests the implementation of cost optimization strategies, which could position the company for margin recovery in subsequent quarters.
A major driver of the bottom-line profitability was a significant surge in finance income, which jumped to ₦149.60 billion in Q1 2025 from ₦8.22 billion in Q1 2024 an increase of over 1,700 per cent.
The company’s finance costs also rose to ₦81.82 billion from ₦55.08 billion, likely due to higher interest rates or increased borrowings.
However, the net finance income of ₦67.78 billion helped cushion the impact of operating losses.
Also, Oando recorded a reversal of impairment on financial assets amounting to ₦182.29 billion, compared to a net impairment loss of ₦3.37 billion in the prior-year period. This reversal contributed to the improved net position.
The company posted a pre-tax loss of ₦52.56 billion but ended the quarter with a net profit of ₦113.06 billion, thanks to a tax credit of ₦165.62 billion.
The scale of the tax credit suggests deferred tax adjustments or loss carry-forwards being recognized under current tax rules.
Out of the ₦113.06 billion net profit, ₦111.29 billion was attributable to equity holders, while ₦1.77 billion was allocated to non-controlling interests, further underscoring the recovery in shareholder value.
Oando’s Q1 2025 results reveal a complex picture. On one hand, the company faces significant operational headwinds, as evidenced by the sharp decline in operating income and volatility in other income streams.
On the other hand, strategic cost management, reversal of impairment losses and substantial finance income have boosted the bottom line.
The results highlight the importance of non-operating items in Oando’s financial performance and raise questions about the sustainability of these earnings.
The reliance on tax credits and financial gains to offset operational inefficiencies suggests that future profitability will depend on restoring robust operating margins.
Investors should also monitor how Oando plans to address the volatility in its other operating income/loss and whether the spike in finance income is recurring or one-off.