Tuesday, May 28, 2024
Advertisement Topt


Ardova doubles loss to N7.6bn as costs consume revenue

Ardova doubles loss to N7.6bn as costs consume revenue
March 06
08:15 2023

Ardova Plc, the petroleum marketing company, closed the 2022 operations with a net loss of N7.6 billion for the group — double the N3.8 billion it posted at the end of the preceding year. Earnings pressure worsened for the indigenous energy company in the second half (H2) of the year, accounting for a N6.5 billion or 85.5 percent of the loss.

Ardova’s unaudited financial report for the full year ended December 2022, shows that operating pressure intensified in the final quarter. Revenue slowdown seen in the third quarter (Q3) proceeded to a drop in the final quarter while costs grew over the period.

Sales revenue went down by N7.1 billion or about 11 percent quarter-on-quarter to N58.2 billion in the fourth quarter (Q4). A good development, however, is that cost of sales dropped at a faster pace of 17.7 percent to N54 billion, which created gross profit of N4.2 billion for the quarter — up from gross loss of almost N320 million in the same quarter in the prior year.

The challenges came from distribution expenses that advanced quarter-on-quarter from a positive figure of about N85 million to N1.9 billion. This is followed by administrative cost that rose by 55.6 percent to N4 billion over the same period. At the same time other income dropped by 45.5 percent to N367 million.


The cost increases with the drop in other income resulted in an operating loss of N1.4 billion in the final quarter, down, however, from an operating loss of N2.2 billion in the same quarter in 2021.

While a net finance cost of N1.4 billion for the final quarter is a drop from N2.6 billion quarter-on-quarter, it helped to build a net loss of N2.8 billion for the quarter.

The company’s full year earnings reading sums up to a cost-income imbalance, as revenue failed to match rapid increases in costs. The company closed the year with sales revenue of N240.8 billion, which represents an increase of N39.4 billion or 19.5 percent. However, no part of the increase reached the bottom line.


Cost of sales was under control at an increase of N35.3 billion or 18.4 percent to close at N226.8 billion for the year. The cost saving from input expenses jerked up gross profit — which grew by 41.7 percent to stand at N13.9 billion at full year.

The problem came from the company’s three main cost lines that consumed more than the gross profit and threw the bottom line into the red.

The main culprit is distribution cost, which jumped by 236 percent to N6.4 billion in the year. The next is administrative cost that grew by 51.7 percent to N12.2 billion.

The two cost increases more than consumed the gross profit and created an operating loss of N2.5 billion for the year. This is a plunge from an operating profit of roughly N786 million in the preceding financial year.


The third leg of the company’s loss building tripod for the year was net finance cost that grew by 35.7 percent to N4.6 billion. That accounted for much of the net loss of N7.6 billion the company incurred at the end of the year — double the N3.8 billion loss in 2021.

The increase in finance expenses is despite some reduction in the company’s borrowings from N58.5 billion to N55 billion over the review period.

The loss for the year has erased the company’s retained earnings from N6.6 billion at the end of 2021 and created a deficit of N1.2 billion at the end of the 2022 operations.

Shareholders’ equity also dropped from N17.1 billion at the end of 2021 to N9.3 billion at the end of 2022 operations, the lowest in many years.


Click on the link below to join TheCable Channel on WhatsApp for your Breaking News, Business Analysis, Politics, Fact Check, Sports and Entertainment News!



No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Write a Comment

error: Content is protected from copying.