By Kingsley Ani
Oando Plc ended the 2025 financial year with its shareholders’ equity deficit widening from N361 billion to approximately N567 billion, despite reporting an after-tax profit of N204.8 billion. According to the group’s audited financial statements, treasury shares worth nearly N379 billion and a N78 billion negative capital distribution reserve outweighed improvements in retained losses and foreign exchange reserves. Total liabilities increased to N8.01 trillion, exceeding total assets of N7.44 trillion, while turnover declined 22 percent to N3.18 trillion.
DECISION HIGHLIGHT
Oando’s return to profitability has improved earnings quality but remains insufficient to reverse a balance sheet that is structurally constrained by a deepening equity deficit.
DECISION MEMO
The central challenge facing Oando is no longer profitability alone but capital reconstruction.
Although the company returned a solid profit in 2025, accounting adjustments associated with treasury shares and capital distribution more than erased the gains retained through earnings. The result is a deeper negative equity position despite improved operating performance.
The widening deficit means shareholders presently have no residual accounting interest in the group’s N7.44 trillion asset base. Instead, the business is financed entirely by creditors, with liabilities exceeding total assets.
Trade and other payables have become the dominant funding source, rising to more than N4 trillion from N2.55 trillion a year earlier. These interest-free obligations now finance about 55 percent of the balance sheet, making suppliers and other trade creditors the company’s largest financial stakeholders.
Operationally, the picture is mixed.
Revenue weakened as the three-year sales recovery lost momentum, while the company slipped into a gross loss following weaker trading conditions. However, significant reductions in impairment charges and administrative expenses restored operating profitability. Finance income also rose sharply, offsetting much of the increase in borrowing costs and supporting a pre-tax profit of N135.8 billion before an income tax credit lifted net profit to N204.8 billion.
These improvements demonstrate that earnings capacity is recovering. They do not, however, resolve the structural imbalance within the balance sheet.
Restoring positive equity will require several years of sustained profit retention, disciplined debt management and stronger operating cash generation. Without that combination, profitability alone is unlikely to rebuild shareholder capital quickly.
DATA BOX
- Equity deficit (2025): N567 billion
- Equity deficit (2024): N361 billion
- After-tax profit: N204.8 billion
- Pre-tax profit: N135.8 billion
- Revenue: N3.18 trillion (down 22 percent)
- Total assets: N7.44 trillion
- Total liabilities: N8.01 trillion
- Trade and other payables: Above N4 trillion
- Borrowings: N2.7 trillion
- Treasury shares: About N379 billion
- Earnings per share: 23 kobo (2024: 18 kobo)
WHO WINS / WHO LOSES
Winners: Trade creditors, whose financing has become central to the company’s operations, and shareholders benefiting from improving profitability and earnings per share.
Losers: Existing shareholders, whose equity position remains negative, and lenders exposed to a balance sheet with no equity cushion.
POLICY SIGNALS
Oando’s results illustrate that accounting profitability and balance sheet strength do not necessarily move together. Capital restoration increasingly depends on sustained earnings retention, prudent liability management and stronger equity rebuilding rather than short-term profit growth.
INVESTOR SIGNAL
The return to profitability improves confidence in Oando’s operating performance, but the deepening equity deficit suggests investors should focus on balance sheet repair, leverage reduction, cash flow generation and capital management alongside earnings growth.
RISK RADAR
Persistent negative equity, elevated leverage, declining revenue and heavy dependence on trade creditors continue to pose financial risks. Unless strong profits are sustained over several years and liabilities are reduced, the company’s capital structure may remain vulnerable despite improving earnings.