NIGERIA | FO Plc | Earnings Flash | 16-Oct-2017 | Elixir Research

forte-oil

16 Oct NIGERIA | FO Plc | Earnings Flash | 16-Oct-2017 | Elixir Research

Dear Valued Investor,

Forte Oil Plc. late on Friday released its Q3-2017 result. The results showed mixed performance as revenue was down while after-tax-profit was up (by 81% y/y) supported by lower effective tax provisioning (9% vs. 50% in Q3-2016) due to losses from Amperion Power Distribution Ltd. and exemption from minimum tax.

Key highlights below:
• Revenue was down 20.0% y/y to ₦98.89 billion. We note that though sales fuels (white products and ATK) was  down by 41.24% y/y, increased revenue from the power business [up to ₦25.46 billion from ₦7.93 billion Q3-2016] supported the group numbers.
• Cost of sales fell by 24.25% y/y to ₦79.98 billion from ₦105.59 billion. As a result, gross profit margin improved to 17.45% from 12.80% in Q3-2016.
• Total operating expenses was lower by 17.49% y/y to ₦8.19 billion from ₦9.92 billion a year ago. Consequently, EBITDA margin rose to 10.02% from 6.50%.
• However, finance cost jumped by 60.44%, to ₦5.63 billion, impacting negatively on profit-before-tax which marginally fell by 0.85% y/y to ₦5.59 billion.
• Profit-after-tax however rose by a whopping 81.44% y/y due to lower tax provision. Cumulative tax provision for the 9 months stood at ₦0.511 million, down 81.98% y/y from ₦2.84 billion prior year quarter.
• Notwithstanding, net profit margin nearly doubled to 5.24% for the Q3-2017 from 2.31% prior year.
The numbers above clearly capture the challenges in the power sector and of course changing trends in the downstream marketing oil & gas business. Subsidy claims have fallen significantly and NNPC has taken centerstage as the primary importer of white goods. The power sector, on the other hand is still batting with outstanding debt and insufficient investment. Notwithstanding this challenges, FO continues to seek new ways of tapping opportunities in the sector.

forte oil plc