Fakoyejo OlalekanThe naira devaluation affected the operating profit of Seplat Energy in the first half (H1) of 2023, Prime Business Africa gathered.
Seplat’s operating profit depreciated by 51.7 per cent or $126.90 million due to the naira devaluation and low oil prices, according to the firm’s H1 2023 financial statements.
The oil and gas company generated $118.4 million operating profit in the first six months of this year, failing to surpass the $245.3 million reported during the same period in 2022.
Recall that on 14 June 2023, the Central Bank of Nigeria (CBN) devalued the naira and merged the multiple forex segments in the official market to the Investors’ and Exporters’ (I&E) window.
This decision led to the naira to dollar exchange rate closing in June at N753.01/$1, up from N461.28/$1 after the naira devaluation.
Also, between January to June 2023, Brent crude oil price dropped by 12.2 per cent from $85.91 at the beginning of the year to $75.41 at the end of H1.
“During the period under review, our operating profit was $118.4 million, showing a significant decrease of 51.7% compared to the $245.3 million achieved in 6M 2022.
“This decline in operating profit was attributed to a combination of lower oil prices and foreign exchange (FX) losses due to changes in exchange rates,” Seplat stated.
Also, the revaluation of Seplat’s financial assets arising from this exchange rate resulted in a net (non-cash) loss of $33.8 million.
Meanwhile, Seplat revenue from contracts with customers increased by 26.9 per cent year-on-year to N278.33 billion in the first half of 2023. This is above the N219.20 billion achieved in H1 last year.
Although much of the turnover was lost to the cost of operation, which surpassed revenue growth, as the cost of sales increased by 31.06 per cent.
The management, whose ouster has been demanded, was unable to tame the cost of operation, resulting in the cost of sales rising to N137.74 billion during the period in review, higher than the N105.09 billion recorded in the previous year.
The burden of the cost of sales impacted Seplat’s profit after tax, as the latter grew by 18.5 per cent to N42.03 billion between January to June, against the N35.44 billion posted in the first six months in 2022.
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