Forte Oil Posts 25% Growth in Power Revenue in H1 2017

Indigenous downstream oil sector player, Forte Oil Plc, has recorded an impressive return on investment from power and energy generation.

The management of the company led by Akin Akinfemiwa, Group Chief Executive Officer of Forte Oil Plc on Friday, August 4, presented the facts behind its H1 numbers at the Nigerian Stock Exchange,NSE.The firm said revenue generated from power increased from 5 per cent in 2016 to 25 per cent in H1 2017, reducing contributions from the downstream segment of the business to 73 per cent from 94 per cent recorded in the first half of 2016.According to Akinfemiwa, the investment in energy activities, as opposed to exposure in the downstream sector alone, illustrated that the company made the right investments.“Looking at our analysis of gross profit per business, in 2016, downstream alone contributed to 86 per cent, today downstream is contributing just about 51 per cent in terms of the gross profit, but power has moved from 13 percent to 45 per cent from 2016 to 2017 while the upstream services have also moved from 1 per cent to about 4 per cent,” he said.

He noted that whilst power was contributing about 25 per cent to revenue in half year 2017, the contributions of the power segment of the business to gross profit translated to 45 per cent, meaning that it is a high margin business; an indication that the company is operating efficiently.Although Forte Oil reported a revenue dip of 22 per cent from N84.4 billion in H1 2016 to N65.6bn in H1 2017, Akinfemiwa stated that this was as a result of marketer’s inability to import petroleum products due to the paucity of FX and unfavourable landing price for PMS as stipulated in the PPPRA template.Forte Oil’s Earnings Before Interest Tax (EBIT) increased by 11 per cent from N6.8 billion in H1, 2016 to N7.6 billion in H1, 2017 largely due to Dividend received from FUS (400m), APDL (N255m) and a freight income of N106m.The company also said increased capacity utilization and energy sent to National Grid from the Geregu power plant and 56% increase in energy tariffs by NERC significantly impacted earnings.The company’s profit after tax for the period thus increased by 84 per cent from N2.2bn in H1, 2016 to N4.1bn in H1,2017.