Oando Plc posted a slim return to profit in the first half of 2025, buoyed by a large reversal of asset impairments and reduced administrative expenses, even as second-quarter losses widened sharply on weaker revenue and surging finance costs.
The Lagos-based oil and gas group reported net income of N63.31 billion for the six months to June 30, marginally higher than the N62.65 billion earned a year earlier, according to unaudited results released on July 31.
This turnaround was driven primarily by a N197.52 billion reversal of previous asset impairments and a N48.1 billion write-back of prior default interest.
However, those one-off gains masked the underlying operational weakness: group revenue slid 15 percent year-on-year to N1.72 trillion in H1 2025, while cost of sales fell at a slower pace of 15 percent to N1.66 trillion. The result was a gross profit of N59.21 billion, down 28 percent from the N82.30 billion recorded in H1 2024.
Quarterly loss deepens
The second quarter proved more challenging. Oando swung to a loss of N49.74 billion in the three months ended June, compared with a N3.30 billion profit in the same period last year.
Quarterly revenue dropped 29 percent to N788.22 billion, while cost of sales exceeded turnover, resulting in a gross loss of N26.22 billion versus a N50.89 billion gross profit in Q2 2024.
Finance costs ballooned to N112.30 billion in the quarter from N38.73 billion a year earlier, reflecting higher debt service charges amid a heavier borrowing load. The company did, however, benefit from the N48.1 billion interest reversal booked during the period.
At the operating level, Oando recorded a N158.71 billion loss in H1 2025, compared with a N121.93 billion profit in H1 2024. Other operating income swung from a gain of N280.20 billion last year to a loss of N298.29 billion in the latest half-year, underscoring the volatility in non-core earnings streams.
Read also: Oando eyes N500bn fresh capital via share offering
Balance sheet strained
Despite the headline profit, Oando’s balance sheet remains under strain. The group’s total equity stayed negative at N305.88 billion at end-June, though this marked an improvement from the N360.98 billion deficit recorded at year-end 2024.
Negative equity reflects accumulated losses and substantial other reserves deficits, despite retained earnings improving due to the H1 profit.
Borrowings rose to N3.19 trillion from N2.77 trillion in December, driven by fresh debt drawdowns. Current liabilities of N4.18 trillion continued to far exceed current assets of N998.57 billion, leaving the group with a working capital deficit of over N3.17 trillion.
Cash and cash equivalents ticked up slightly to N227.71 billion from N221.78 billion at year-end, supported by N868.10 billion in new borrowings during the half. However, the company reported a net operating cash outflow of N357.47 billion, compared with an outflow of N329.52 billion a year earlier, highlighting persistent liquidity pressures.
The first-half performance underlines Oando’s continuing reliance on exceptional items and debt restructuring to offset operational headwinds. With oil price volatility, high financing costs, and a heavy debt burden, the company faces significant challenges in sustaining profitability on a recurring basis.
The sharp Q2 loss also signals that the gains from impairment reversals may not be repeated in the second half, leaving earnings vulnerable if crude prices soften or production volumes disappoint. While the reversal of prior impairments boosted the bottom line, such adjustments do little to strengthen cash generation, an area where the company continues to struggle.
Oando’s management will need to prioritise cash flow improvement, debt reduction, and operational efficiency in the remainder of 2025 to stabilise the balance sheet. Without a sustained improvement in core operations, the company’s high leverage and negative equity position could constrain strategic flexibility and investor confidence.
