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Oando Share Price Reaches Two Year High

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  • Oando Share Price Reaches Two Year High

Stocks hit a four-month high earlier this week, lifted by gains in Nigeria’s largest indigenous energy conglomerate, Oando PLC, and improved investor sentiment towards the country’s recession-hit economy. The stock market had gained N117 billion by Tuesday this week to extend a bullish eight-day run, while Oando rose by 131%, its highest level in 18 months.

Analysts at Afrinvest Limited said that the upbeat performance in the equities market was mainly driven by solid Q1 2017 earnings, as well as the knock-on effect of improved foreign exchange liquidity.

The upturn was significantly impacted by gains recorded in medium and large capitalised stocks. Oando, who remained at the top of the gainers list for five straight days led 33 other gainers on Thursday, May 9 including Access Bank, FBN Holdings, Guaranty Trust Bank, Dangote Cement, Nigerian Breweries, Okomu Oil, Zenith Bank and Stanbic IBTC.

Oando’s return to profitability and increase in share price is indicative of the successful implementation of its corporate initiatives focused on Growth across its operations; Deleverage via the divestment of non-performing assets; and Profitability, by focusing on dollar-denominated export earnings.

At the recently concluded Facts Behind the Figures session at the NSE, the ED Business Development, Nigeria Stock Exchange, HauraJalo-Waziri spoke positively to Oando’s FYE 2016 and Q1 2017 financials; also speaking was Oando PLC’s Group Chief Executive, Wale Tinubu “The challenge we faced was the economic and sector downturn, we came clean to the market, created a 5-point plan and successfully delivered on every part of that plan.”

The company deleveraged its balance sheet through the divestment of its upstream services company Oando Energy Services and embarked on the expansion of its retail and gas footprint through a strategic partnership with Helios Investment Partners and Vitol Group to recapitalize its downstream business for US$210 million and the US$115.8 equity buy-in of its Gas and Power business by Helios Investment Partners.

Oando acquired a N108 billion medium-term-loan with 11 Nigerian banks; this medium term 5-year consolidated facility, with a 3 year moratorium on principal, enabled the overall restructure of the Group’s obligations. Today, Oando’s borrowings have significantly reduced by 29% to N225.9 billion in the first quarter of 2017 from N355.4 billion in the first quarter of 2016 and its year to year return increased by 103.62% compared to the comparative period in 2016, quelling concerns of critics.

The successful deployment of the company’s five-pronged strategy is evident in its FYE 2016 results with a N3.5 billion profit-after-tax, a 107% increase from the loss of FYE 2015. A review of Oando’s results further show positive performance across all financial indices, turnover increased by 49% to N569 billion from N382 billion in FYE 2015, while EBITDA increased by 51% to N71.0 billion from N47.0 billion in FYE 2015, boosting investors and shareholders confidence in the company and its management team.

In Q1 2017, Oando’s turnover grew by 116% to N138.4 billion and gross profit by 53% to N13.4 billion compared to the first quarter of 2016. Profit-Before-Tax increased by 207% to N494 million compared to (N461 million) in the first quarter of 2016 while profit-after-tax decreased by 58% to N1.7 billion compared to N4.1 billion in Q1 2016.

“The first quarter earnings underscore our proactive decision to focus on our dollar denominated export businesses. Our resilience is evident in our capacity to grow via a diversified model, and as we continue to chart our deliberate path in this challenging business environment, we look forward to better performance in the quarters to come,” said Tinubu.

With the gradual decline in pipeline disruptions, increased efforts by the government to curb security issues in the Niger Delta, and an upturn in oil prices north of $50, the sector is optimistic of a near term recovery. “The plan is to go from 60,000boedp by the last quarter 2017 to 80,000 in 2018 and hopefully 100,000 by 2020. We also got approval from the president to repair, operate and maintain the Port-Harcourt refinery together with our partner Agip. We plan to increase the refinery capacity from 30% to a 100%, subsequently to 120%” the Group Chief Executive said at the NSE.a

The bullish performance of the NSE further affirms the International Monetary Fund’s (IMF) projection that Nigeria’s economic growth would rise by 0.8% in 2017. The IMF said: “After contracting by 1.5 percent in 2016 because of disruptions in the oil sector coupled with foreign exchange, power, and fuel shortages, output in Nigeria is projected to grow by 0.8 percent in 2017 as a result of a recovery in oil production, continued growth in agriculture, and higher public investment.” This will in turn impact the economic growth of the country, projected to rise to 2.6 percent in 2017 and 3.5 percent in 2018.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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