Ardova Positions Business for Future Growth, Cuts Borrowing Cost by 69% in 9 months

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By Dipo Olowookere

Despite the huge challenges businesses across the globe, especially the oil industry, have faced this year, Ardova Plc has been able to come out stronger.

This has been made possible by the cost-optimisation, superior customer experience, operational efficiency, innovation, and strategic partnerships strategies of the board and management.

In the first nine months of 2020, the energy firm significantly reduced its borrowing cost by 69.6 per cent to N0.7 million from N2.3 billion in the same period of last year.

This was mainly due to the lower interest paid on bank loans and overdrafts in the period under consideration as N299.1 million was paid in contrast to the N1.3 billion paid last year.

Business Post reports that the superior customer experience offered by Ardova resulted in the 3.7 per cent rise in revenue to N128.2 billion from N123.6 billion, with the cost of sales up to N119.2 billion from N115.4 billion, leaving the company with a gross profit of N9.0 billion versus N8.1 billion in the same period of 2019.

In strict compliance with its cost-optimisation policy, Ardova cut is administrative expenses to N5.2 billion from N6.0 billion and this was mainly because of the reduction in board and AGM costs, personnel costs, transport and travel costs, amongst others.

In the first nine months of the year, the distribution expenses reduced to N1.6 billion from N1.7 billion and the operating profit went down to N2.9 billion from N4.2 billion.

Business Post observed that the bottom line of the results was not too palatable in the first nine months of the year, but in the third quarter, the firm bounced back into profitability.

In Q3 of 2019, the company had a net loss of N190.8 million but in Q3 of 2020, it was a net profit of N875.4 million, while the balance sheet closed very strong as the total assets closed at N49.8 billion versus N47.0 billion in FY 2019.

The CEO of Ardova, Mr Olumide Adeosun, in his reaction to the company’s performance in the period under consideration, said it “reflects our continued resolve towards operational excellence despite the challenging operating environment.”

“In the third quarter, we made significant strides in optimizing our core assets, built a resilient balance sheet, and worked extensively in positioning our business for future growth.

“Consequently, this led to increasing top-line revenue, higher margins, and improved operational efficiency.

“Specifically, our business transformation initiatives resulted in a sterling growth of over 2,000 per cent in normalized profit with operating expense ratio and gross margin printing at 5.2 per cent and 7.0 per cent,” he added.

Continuing, he said, “As a forward-thinking organisation, we will continue to explore opportunities in clean energy solutions and appraise the ever-changing downstream regulatory environment to build a socially responsible and formidable integrated downstream energy company.

“These opportunities and reforms, where required, will lead to one-off investments and collaboration with the right partners to deliver sustainable future returns to the business in the short to medium-term.”

“Overall, we are pleased with the progress we have made so far, especially in what has been the most challenging year for businesses across the globe and our industry in particular,” Mr Adeosun, who has transformed the firm since it was acquired from Mr Femi Otedola last year, stated further.

“Nonetheless, we remain committed to continue enhancing shareholder value. The focus over the coming periods will be to consolidate and build on the gains achieved and further refine our processes to ensure we achieve our set objective of superior customer experience, operational efficiency, innovation, and strategic partnerships,” he assured.

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