Last Update 04 Nov 25
Oando Plc – H1 2025 Financial Review: Avoid – Until Operational Turnaround is Evident
OANDO PLC 9M 2025 RESULTS: STRATEGIC TURNAROUND GAINS TRACTION AMID REVENUE PRESSURE AND BALANCE SHEET REPAIR MOMENTUM
Strategic Context
Oando Plc delivered a materially improved financial performance through Q3 and the first nine months of 2025, supported by operational recovery in the upstream business, strengthened asset integration following the NAOC acquisition, and a meaningful shift in business mix toward production and export-led growth. The Group continued to navigate a structurally shifting energy landscape marked by the rise of domestic refining capacity, notably from the Dangote Refinery, which reshaped fuel import dynamics and pressured trading revenue.
Despite top-line contraction, Oando demonstrated increased resilience through stronger finance income, disciplined cost control, partial recovery of legacy receivables, asset monetization gains, and improved operating efficiencies across oil and gas operations. The Company’s strategic focus on upstream consolidation, portfolio reshaping, and capital recycling supported a significant bottom-line turnaround, even as leverage and negative equity remain key structural considerations.
Financial Performance Overview
Revenue & Gross Margin
Oando recorded ₦820.7 billion in Q3 2025 revenue, a 29.2% YoY decline due to lower trading volumes, reflecting reduced importation of gasoline with domestic supply now supported by the Dangote refinery.
Despite the revenue compression, cost of sales declined 26.7% YoY, cushioning margin pressure. Gross profit contracted to ₦53.8 billion (-52% YoY), with gross margin edging down to 6.6% vs 9.7% in Q3 2024, underscoring near-term pressure on commercial activities and product mix.
For the nine-month period, revenue fell 20% YoY to ₦2.54 trillion, with gross profit lower at ₦113.0 billion vs ₦194.4 billion, tracking reduced trading and refined product contribution.
Operating Performance & Efficiency Improvements
Operating income in Q3 grew 25.3% YoY to ₦49.0 billion, supported by:
- A sharp drop in administrative expenses to ₦30.86 billion from ₦83.24 billion YoY
- Cost optimization and operational discipline
- Stronger upstream output and asset uptime (82%)
- Legacy issue resolution and receivable recoveries
However, the quarter saw:
- Higher impairment charges of ₦46.8 billion (vs ₦18.3 billion YoY)
- Lower other operating income (₦11.1B vs ₦28.5B YoY)
Despite this, Oando’s strategic cost rationalization enabled positive operating leverage.
Finance Income & Profitability
Finance income emerged as a major earnings catalyst:
- Finance income surged to ₦209.7B (from ₦9.7B in Q3 2024)
- Finance costs increased to ₦94.7B (vs ₦64.4B), reflecting elevated borrowings and funding costs
- Net finance income stood at ₦115B, reversing a ₦54.7B net loss in the same period last year
This significant finance income uplift drove a robust bottom-line turnaround:
- PBT: ₦165.2B vs ₦14.4B loss in Q3 2024
- PAT: ₦137.99B vs ₦13.65B in Q3 2024
- EPS improved to 1 kobo
For 9M 2025, PBT was ₦19.46B (vs ₦31.1B), but PAT surged to ₦201.3B, aided by a ₦181.8B tax credit, reinforcing the material impact of recovered assets and tax positions.
Balance Sheet Position
Oando’s balance sheet continued to strengthen:
- Total assets grew 5.2% to ₦6.77T
- Total liabilities up 2.7% to ₦6.98T
- Equity improved to a negative ₦209.4B (from negative ₦361B)
- Retained losses improved from ₦292.5B to ₦88.0B
Despite remaining in negative equity territory, Oando is clearly progressing on balance sheet repair, supported by stronger operating cash flows, upstream gains, and legacy recoveries.
Strategic Highlights
Key drivers shaping Oando’s operational rebound:
- Upstream
- Production: 38,121 boepd (+59% YoY)
- 82% asset uptime post-NAOC integration
- Upsized RBL facility to $375M
- Expansion into Angola (Block KON-13 operatorship)
- Strong operational safety (zero LTIs; 16.8M LTI-free hours)
- Trading
- 21 crude cargos traded (vs 15 YoY)
- Pivot away from PMS imports (0 consignments)
- Advancing structured pre-export financing
- Named preferred bidder for Guaracara Refinery (Caribbean entry)
- Energy Transition & New Ventures
- EV mobility expansion & fleet scaling
- 1.2GW solar PV assembly plant underway
- PET recycling plant development in progress
- Geothermal pilot feasibility completed
- Mining investments progressing (lithium, gold, tin prospects)
Strengths
- Significant YoY earnings reversal & improved PAT quality
- Strong upstream execution & volume growth
- Legacy receivable recovery & litigation progress
- Material finance income uplift & funding flexibility
- Cost optimization supports margin stability
Weaknesses
- Sustained negative equity position
- High leverage & increasing finance costs
- Revenue contraction from trading business
- Higher impairment provisioning signals underlying credit/asset exposure
Outlook
Management expects continued improvement driven by:
- Annualized production target ~40,000 boepd
- Focused shareholder returns (2-tranche share distribution)
- Strengthened balance sheet and liquidity profile
- $120-130M FY capex prioritizing upstream growth & ESG
- Continued trading diversification beyond domestic PMS market
The shift toward upstream monetization, export growth, and energy diversification underpins long-term value creation, though balance sheet health and cash discipline remain critical.
Analyst Commentary
Oando’s 9M 2025 performance marks a pivotal turnaround period underscored by decisive strategic execution, upstream scale-up, and capital recycling. The financial rebound — despite revenue compression — signals effective portfolio repositioning and operational resilience.
Management’s disciplined approach to asset integration, receivables recovery, and cost realignment underscores improving internal controls and operational maturity.
However, sustained progress requires:
- Continued deleveraging to restore balance sheet strength
- Consistent upstream delivery and cash-flow generation
- Continued diversification beyond legacy trading exposures
Overall, Oando enters Q4 2025 as a transforming energy champion with improving fundamentals, renewed asset momentum, and rising stakeholder confidence — though leverage and equity repair remain key watchpoints.
Analyst Conclusion
“Oando’s results reflect a business in active recovery mode — rebuilding core production capacity, tightening financial controls, and repositioning for long-term energy relevance. While capital structure repair remains a priority, strong upstream execution and strategic portfolio shifts position the company for sustained value restoration.”
Executive Summary
Oando PLC delivered a significant earnings recovery for the nine months ended September 30, 2025, supported by robust upstream production performance, disciplined cost management, and substantial net finance income. Despite top-line pressure from lower product trading volumes and margin compression, the Group returned to strong profitability, benefiting from increased crude output, improved asset utilization and favourable financial settlements. Profit Before Tax surged to ₦165.2 billion in Q3 2025 (vs. loss of ₦14.4 billion in Q3 2024), while Profit After Tax rose to ₦138.0 billion (vs. ₦13.7 billion YoY), driven primarily by stronger operating discipline and a material swing in finance income. For 9M 2025, PAT rose 164% YoY to ₦201.3 billion, reflecting strengthened operations and improved balance sheet normalization efforts. However, Group revenue declined 29.2% YoY to ₦820.7 billion in Q3 as refined product trading volumes moderated amid changing domestic market dynamics, particularly increased local refining activity. Production averaged 38,121 boepd (+59% YoY), supporting improved upstream revenue contributions. Overall, the Group delivered a resilient performance, demonstrating the benefits of its upstream-led strategic pivot and financial restructuring initiatives.
Financial Highlights – Statement of Profit or Loss
₦’million Q3 2025 Q3 2024 9M 2025 9M 2024
Revenue 820,658 1,158,665 2,708,617 3,399,473
Cost of Sales (766,842) (1,045,136) (2,478,731) (3,184,923)
Gross Profit 53,816 113,529 229,886 214,550
Other Income 41,966 (10,615) 72,648 31,031
G&A / Opex (46,801) (83,215) (104,756) (155,006)
Operating Profit 48,981 38,851 197,778 90,575
Finance Income 165,904 44,267 187,972 94,532
Finance Costs (50,860) (98,944) (148,448) (298,996)
Net Finance Income / (Cost) 115,044 (54,677) 39,524 (204,464)
Profit Before Tax 165,200 (14,374) 237,302 (113,889)
Tax Expense (27,200) (373) (35,968) (37,510)
Profit After Tax 137,999 13,655 201,334 76,379
EPS (₦) ₦0.01 ₦0.00 ₦0.02 ₦0.01
Revenue Performance
- Group revenue declined 29.2% YoY in Q3 and 20.3% YoY for 9M due to lower refined product trading volumes.
- Upstream performance remained robust with 59% YoY production growth to 38,121 boepd, supported by improved asset uptime (82%).
- Increased crude offtake and structured upstream trading partially mitigated refined product weakness.
Key drivers
- Strategic pivot to upstream and crude-linked trading
- Reduced refined imports due to domestic refining expansion
- Higher production following NAOC asset consolidation
Profitability and Margins
- Gross profit declined 52% YoY in Q3 due to weaker margins and volumes.
- Operating margin improved YoY on lower administrative expenses and improved cost optimization.
- Finance income reversal: Net finance gain of ₦115.0bn vs prior period loss drove earnings momentum.
- Q3 PBT margin: 20.1% (vs negative YoY) due to strong finance income contribution.
Earnings quality considerations
- Upstream contributions strengthening
- Finance income supported by legacy recoveries and settlement gains
- Gross margin pressure requires close monitoring as operating mix evolves
Balance Sheet Overview
₦’million Sept 2025 Dec 2024 % Δ
Total Assets 6,771,174 6,436,782 +5%
Total Liabilities 6,980,603 7,141,208 -2%
Equity (209,429) (704,426) +70%
Borrowings 2,801,842 2,863,495 -2%
Interpretation
- Equity deficit narrowed materially as cumulative retained earnings improved.
- Liabilities reduced marginally following restructuring and repayments.
- Asset growth driven by upstream investment (₦74.9bn capex, +178% YoY).
Key Ratios & Indicators
Metric 9M 2025
Revenue Growth -20.3%
PBT Growth N/M (turned positive)
PAT Growth +164%
EPS Growth +100%
Asset Growth +5%
Equity Improvement +70%
Return to profitability despite revenue weakness signals improved capital discipline and operational execution.
Strategic Insights
- Upstream-led value strategy gaining traction
- Strong production uplift following operator control & asset consolidation
- Cost optimization and financial restructuring improving liquidity and solvency trajectory
- Trading model shifting toward higher-margin crude export structures
Strengths
- Strong production growth and improved operational uptime
- Significant swing to finance income supporting earnings recovery
- Meaningful equity deficit reduction and refinancing progress
- Improved operating efficiency and cost control
Weaknesses
- Declining revenue and gross margin compression
- Earnings quality still partly driven by finance gains
- High leverage and negative equity position remain key risks
- Trading revenue sensitive to domestic market shifts
Outlook
Oando is positioned for gradual earnings stabilization as upstream volumes scale and trading strategy rebalances. Key catalysts include continued production ramp-up, further legacy receivables recovery, improved cash generation and resolution of outstanding financing obligations.
Focus areas ahead:
- Convert earnings into sustained operating cash flows
- Continue deleveraging and balance-sheet strengthening
- Capital discipline to support steady growth
Analyst View
“Oando’s Q3 performance marks a pivotal earnings recovery as upstream momentum and financial restructuring drive profitability. Revenue softness highlights market transition challenges, but cost optimization and strategic asset consolidation provide a more resilient base. Sustained cash flow delivery and balance sheet strengthening remain the next critical milestones.”
Conclusion
Oando PLC delivered a strong turnaround performance in 9M 2025, underpinned by accelerated upstream operations, disciplined cost execution and significant finance-related gains. While top-line pressures and a negative equity base require continued monitoring, operational traction and financial restructuring efforts are positioning the Group toward a more stable growth phase.
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Disclaimer
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