• Tuesday, July 16, 2024
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Okomu: Sustaining upward trajectory in an era of war, uncertainty

Okomu: Sustaining upward trajectory in an era of war, uncertainty

As Palm oil prices continue to rise on tight global supplies, Okomu Oil Palm Company, has reported a 72.49 percent surge in revenue in the first six months of 2022 to N40.76 billion.

Findings by BusinessDay showed the growth in revenue was on the back of a 77.5 percent increase in local sales which amounted to N37.88 billion, while export sales amounted to N2.87 billion in the first half (H1) of 2022.

On a quarterly basis (q/q), revenue was down by 1.07 percent to N20.27 billion in the second quarter (Q2) of 2022 from N20.49 billion in the first quarter (Q1) of 2022.

Its profit also experienced an uptick of 76.5 percent to N16.84 billion in the first half of 2022 from N9.54 billion in the corresponding period of 2021.

BusinessDay’s findings showed Nigerian Exchange Limited (NGX) showed that the growth in revenue is driven by export sales due to the 52.9 percent surge in crude palm oil (CPO) prices influenced by the Russian/Ukraine crisis and sustained supply issues in the international market.

“Palm oil prices reached record highs in 2022, driven primarily by the disruption in the sunflower oil market caused by the Russia-Ukraine war and export restrictions imposed by the Indonesian government,” CSL Stockbrokers Nigeria’s Oil Palm report.

The palm oil company also reported an increase in its cost of sales by 399 percent YoY to N9.68 billion in the first half of 2022 from N1.94 billion in the corresponding period of 2021.

Analysts at CSL Stockbrokers Limited have attributed the rise in the cost of sales to higher plantation costs owing to costlier fertilisers, an effect of higher crude oil prices.

“The company’s reliance on its 5Mw palm biomass plant also ensured that it was mostly immune to the impact of higher prices of other energy alternatives,” CardinalStone earnings update stated.

Okomu Oil Palm

Okomu’s operating expenses (OPEX) declined by 19.87 percent to N7.34 billion in the first half of 2022 from N9.16 billion in the first half of 2021, contributing to the 76.5 percent growth in profit during the period.

Read also: Tight Global Supplies favour Okomu oil as revenue hits N20bn in Q1

Net finance costs increased by 294 percent to N303.9 million in the first half of 2022 from N77.1 million in the first half of 2021, primarily driven by a 925 percent YoY increase in interest on long-term loans to N319.3 million in the first half of 2022.

The palm oil company’s total asset was up 33.16 percent in the first half of 2022 to N80.15 billion from N60.19 billion in the corresponding period of 2021.

In the same vein, its total shareholder’s equity, otherwise known as the net asset, was up 14.35 percent to N43.26 billion in the first half of 2022 from N37.83 billion in the first half of 2021.

Analysis by Businessday to measure the performance of a company based on its average shareholders’ equity outstanding showed a return on average equity (ROAE) of 87.1 percent.

Cash and cash equivalents

The agribusiness reported cash and cash equivalents of N17.85 billion in the first half of 2022, a 122 percent increase from N8.04 billion reported in the first half of 2021, largely reflecting an improvement in operating activities which grew by 65.26 percent to N22.64 billion during the period.

The company, however, reported negative net cash used in investing activities amounting to N6.56 billion in the first half of 2022, a 101 further decline from a negative cash flow used in investing activities of N3.26 billion reported in 2021.

A large chunk of the company’s outflow used in investing activities was due to investments in the purchase of plants, property, and equipment, and pre-cropping expenditure incurred (biological assets) which amounted to N6.35 billion and N269.9 million respectively in the first half of 2022.

Okomu also reported negative cash flow used in financing activities which amounted to N8.18 billion, a 17.70 percent further decline from a negative cash flow used in financing activities of N6.95 billion reported in the first half of 2021.

This was primarily due to dividends, interest, and loan reimbursements paid during the period, amounting to N7.63 billion, N357.96 million, and N194.7 million respectively.

Okomu Oil Palm reported earnings per share of N17.65 per share in the first half of 2022.

Okomu Oil Palm is a Nigeria-based company in the business of oil palm cultivation, processing of fresh fruit bunches (FFB) into crude palm oil for resale, rubber plantation, and processing of rubber lumps to rubber cake for export.

The company has three reportable segments based on its products and services: palm plantation, rubber plantation, and palm processing.

Okomu has the second-largest palm oil plantations in Nigeria, is the country’s biggest CPO producer, and is the second-largest rubber producer in Nigeria. It owns three concessions in the Edo state, totaling 33,112ha, with palms covering 19,060ha and rubber spanning 7,335ha as of end-2021.