Nigeria's top oil palm producers reap big amid naira slump

…Okomu Oil, Presco become profit powerhouse in Nigeria’s Agro-Industry

Okomu Oil and Presco Plc, two agro-based companies listed on the Nigerian Exchange Group have achieved their highest after-tax profit in a decade in 2024 despite a challenging business environment.

These two agro-based companies were able to weather the storm of inflation and Naira devaluation to record the highest after-tax profit in a decade where Presco recorded 4088.7 percent growth and Okomu oil recorded 1188.3 percent growth from 2015.

“The highest oil palm commodity comes from Edo state because the land is very good for oil plantation and the best oil is recorded in that axis. Edo state has Okomu oil and Presco which shows the plantation yield more in Edo state which is why they recorded the highest production of oil,” said Femi Oke, chairman of All Farmers Association Of Nigeria at Lagos/Southwest zone.

Godwin Obaseki, the immediate past governor of Edo State had said May, last year, that on the back of reforms in the agriculture sector to boost oil palm production and economic growth, the state has emerged as Nigeria’s number one oil palm producing state, contributing about 12 percent to the aggregate palm oil production in Nigeria.

He stated that Edo State is closely followed by Akwa-Ibom and Cross River State who contribute between five to eight percent.

The governor through the Edo State Oil Palm Programme (ESOPP), aimed at de-risking the oil palm value chain by providing contiguous land to investors for sustainable production has allocated over 70,000 hectares of land for oil palm development and attracted over $500 million in investment, the largest of its kind in sub-Saharan Africa.

“Apart from Okomu and Presco, the two largest agric companies quoted on the Nigerian Stock Exchange, the State today plays host to over ten companies that have been allocated land including Dufil Prima Foods, the makers of Indomie Noodles; Saro Oil Palm; Flour Mills Nigeria Plc; an American Company called Fayus, and Saturn Farms, among others,” he said.

Okomu Oil recorded 61.9 percent growth year-on-year while Presco Plc recorded the largest growth of 217 percent which is an improvement in their financial performance in 2023.

Further analysis reveals that both firms recorded revenue growth, and profit growth which poised resilience given the challenges of the flying wings of inflation and Naira depreciation.

Okomu Oil and Presco has gained profitability in a season where many consumer goods companies struggled with losses.

Okomu Oil Plc’s share price traded at N545 with 142,467 volumes traded and 953.9 million shares outstanding as of 12:58 pm on February 28, 2025.

Presco Oil’s share price traded at N785 on February 28, 2025. About 140,996 volumes were traded on that day with 1 billion shares outstanding as of 1:01 pm.

Presco Plc, Nigeria’s biggest palm oil maker, is set to raise N100 billion in Series 1 of its N150 billion bond program. This would mark the largest corporate bond issuance in the industry. The bond will have a 7-year tenure with a yield range of 23.25 percent to 23.75 percent.

Presco Plc boasts a strong credit profile, with an Aa rating from Agusto & Co. and an A- rating from GCR.

This bond issuance represents Presco Plc’s second venture into the capital market, following the successful raising of N34.5 billion in 2022 under Series 1 of its N50 billion issuance programme. That issuance was also a 7-year bond, carrying a coupon rate of 12.85 percent.

Okomu Oil Palm, the older and the larger of the two companies, was incorporated in 1979 and listed its shares on the Nigerian Stock Exchange (NSE) in 1991, the same year Presco was incorporated.

Both Okomu Oil Palm and Presco are integrated agricultural companies with oil palm plantations, palm oil mills, crushing plants, and oil refining plants. They engage in the cultivation of oil palm and the extraction and refining of palm oil into finished products. They are major suppliers of specialty fats and oils to several large and medium companies.

While the Nigerian palm oil industry is experiencing a boom due to increased investment, demand, and market activity, Henry Olatunoye, former national president of the National Palm Produce Association of Nigeria (NPPAN), highlighted a concerning trend.

He told BusinessDay that the Naira devaluation has significantly impacted the cost of essential goods in the country. “This devaluation has also made investments denominated in Naira less attractive compared to those in stronger currencies like the dollar.”