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Forte Oil exceeds forecast with 61.61% rise in profit

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Forte Oil reported stronger than expected growth in both profits and sales in the nine months through September 2014, as it continues to improve on efficiency with a view to satisfying customer needs.

It would be noted that the downstream giant operational performance had been stellar and impressive since rebounding from the oil subsidy gloom, as many firms in the sector were on the verge of collapse.

For the nine months through September 2014, the company’s profit before tax (PBT) increased by 61.61 percent to N5.20 billion from N3.21 billion the same period of the corresponding year (Q3) 2013.

The company’s performances were also impressive at the top-line level as revenue rose by 33.06 percent to N122.58 billion in Q3 2014, compared with N92.12 billion as of Q3 2013.

Operating expenses were up by 9.20 percent to N7.78 billion in Q3 2014, from N6.52 billion as of Q3 2013.

In order to bolster performance, give a higher return on owner’s returns and improve customer satisfaction, the company incurred debt in the acquisition of assets as finance costs increased by 146.35 percent to N1.14 billion in the review period.

Some analysts also attribute the spike in borrowing costs to the delay in subsidy payment to oil marketers by the Ministry of Finance. The delay has caused liquidity squeeze as these oil firms are unable to pay bank loans.

The Nigeria foremost retailer (Forte) has acquired 100 brand new product delivery trucks with its strategy to sustain efficiency and attain exceptional product, according to a statement on the company’s website.

“We are very confident that the acquisition of these 100 world-class product delivery trucks is a very strategic investment,” said Akin Akinfemiwa, group CEO of the company, in the same statement.

“The acquisition will substantially increase our capacity to grow our revenue, profitability and ultimately maximise value for our shareholders as we move towards our mission of building a long-term successful company,” said Akinfemiwa.

Through its savvy management, the company was able to manage effectively direct projects attributable to projects as gross profit increased by 55.91 percent while gross margin was 10.84 percent in the review period.

Fixed assets utilisation were also impressive as it turned 97 times, signalling the effective deployment of assets to generate revenues and profits.

Total assets were up by 20.30 percent to N125.92 billion in Q3 2014, as against N104.87 billion fuelled by a 50.53 percent increase in trade and other receivable in the review period and a 20.30 percent increase in inventories.

Return on average equity (ROAE) was 14.58 percent in Q3 2014, while the return on average assets (ROAA) stood at 5.44 percent the same period.

Forte Oil’s share price closed at N215.90 as of October 20 2014, on the floor of the NSE, while market capitalisation was N233.23 billion.

Article Credit: Businessdayonline

Updated 4 Years ago

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Tags:     Forte Oil     Akin Akinfemiwa     Total assets