Oando Plc: One-Off Gains Mask Deeper Operational Challenges
Oando Plc has released its unaudited Interim Consolidated and Separate Financial Statements for the six months ended June 30, 2025, offering a mixed bag of headline positive and underlying red flags.
While the company reported a notable reversal of prior impairments pushing its bottom line into profitability the financial results highlight deep-rooted operational inefficiencies, persistent cost pressures, and rising liabilities that remain cause for investor caution.
Oando reported total revenue of N343.86 billion for H1 2025, reflecting a stagnation in topline growth when compared with prior periods.
The company’s revenue performance appears to be tethered to a constrained operating environment marked by subdued trading volumes, volatile oil prices, and regulatory hurdles in Nigeria’s oil and gas sector.
While the revenue figure matches the cost of sales reported in H1 2024 (also N343.86 billion), this year’s cost of sales has not been disclosed—raising transparency questions and possibly hinting at margin compression and restatements that are yet to be fully detailed.
Despite this, Oando reported gross earnings of N117.57 billion, which include income from ancillary streams and reclassification of financial items, but lacks clarity in the absence of audited numbers.
The most striking development in Oando’s interim statement is the significant reversal in the impairment of financial assets.
From a negative impairment of N7.21 billion in the corresponding 2024 period, the company reported a positive net reversal of N197.52 billion in H1 2025. This accounting adjustment, while welcome, is not reflective of recurring business performance.
The impairment reversal helped buoy the bottom line, compensating for the lack of topline momentum. As a result, the company swung into profitability on paper, posting an Earnings Per Share (EPS) of N5, up year-on-year per share position same compared to previous year.
However, seasoned analysts may view this gain as largely cosmetic unless backed by core operational improvements and sustainable revenue growth in future quarters.
Despite the temporary earnings boost, Oando remains in a precarious equity position. Retained losses declined marginally from N292.40 billion in H1 2024 to N228.33 billion in H1 2025, reflecting a partial healing of balance sheet wounds.
However, this improvement is overshadowed by the company’s deep and widening negative reserves, which moved further into the red from N215.88 billion to N224.23 billion during the same period.
This signals that while the profit improvement appears promising, the company is still far from turning the page on its long-standing financial strain.
On the asset side, Oando’s total assets grew from N6.43 trillion to N6.76 trillion, a modest but notable increase. This expansion could be attributed to either asset revaluations, foreign exchange effects, or further acquisitions though the financial statements provide limited insight on the driver.
In tandem, total equity and liabilities also increased to match at N6.76 trillion, maintaining the accounting balance. However, a troubling indicator is the rise in trade and other payables, which edged up from N2.55 trillion to N2.58 trillion, suggesting liquidity pressure and continued reliance on credit to fund operations.
Beyond the numbers, the bigger story lies in Oando’s operational landscape. The company continues to grapple with inefficiencies across its core upstream and trading segments, high borrowing costs, and exposure to foreign exchange fluctuations.
Its cost structure remains unwieldy, and with oil market volatility expected to persist, Oando’s dependency on financial restructuring rather than business transformation remains a key risk.
While the reversal of impairments provided a much-needed reprieve, the company’s underlying business model remains under pressure from systemic inefficiencies and a highly leveraged position. Without meaningful revenue diversification alongside cost optimisation, the profit uptick risks being short-lived.
From a valuation standpoint, the positive EPS and trimmed retained losses may lure speculative investors eyeing a potential turnaround. But caution is advised.
The numbers, though improved on paper, reflect a business still in recovery mode. The continued build-up of liabilities, opaque cost reporting, and growing negative reserves signal that Oando is still some distance from financial health.
Investor Recommendation
For now, Oando represents a high-risk, high-volatility play. Long-term investors should maintain a watchlist position, pending the release of audited results and clearer guidance on core earnings sustainability. Short-term traders may find upside if market sentiment shifts, but should do so with tight risk controls. Strategic institutional players should await signs of operational efficiency, deleveraging, and revenue stabilisation before committing capital.
Oando’s H1 2025 results tell a tale of two realities: a balance sheet padded by one-time gains, and an operating business still burdened by inefficiency and high cost of finance. While the financial cosmetics have improved, the fundamentals demand a deeper overhaul. Until that occurs, optimism should be tempered with realism. #Oando Plc: One-Off Gains Mask Deeper Operational Challenges#
Naira Softens in July, External Reserves Rise by $2.15bn
