Okomu Oil Palm Company Plc is projecting a pre-tax profit of N3.5 billion in the second half of 2024, reflecting a 68 percent decline from the N10.93 billion profit before tax recorded in the corresponding period of 2023. This is according to the company’s earnings forecast for the second half of 2024 seen by BusinessDay.
The downturn is primarily attributed to a series of bandit attacks that have disrupted the company’s operations. In May 2024, Okomu Oil was targeted by multiple attacks from a militant group demanding a 25 percent shareholding in the company. During a discussion with journalists, Graham Hefer, the company’s managing director, had appealed to the Federal Government for assistance in combating the bandits, noting that the attacks had adversely
affected the company’s rubber production in 2023.
Hefer had stated, “Last year, we also had attacks. The same people were attacking us last year, so we had to stop our rubber farming.” In his interview with journalists from the News Agency of Nigeria (NAN), Hefer also highlighted challenges such as multiple taxations and foreign exchange scarcity that had continued to plague the business.
According to the company’s forecasts for the third quarter of 2024, pre-tax profit is projected to fall to N1.054 billion, marking a significant 83 percent decline from the N6.3 billion pre-tax profit recorded in the third quarter (Q3) of 2023. The company pre-tax profit for the fourth quarter (Q4) of 2024 is expected to be around N2.45 billion, representing a 47 percent decline from the N4.6 billion pre-tax profit posted in Q4 2023.
Based on these forecasts, the company projects a 26 percent year-on-year decline in turnover for the second half of 2024, estimating a turnover of N25.7 billion, compared to the N34.5 billion revenue recorded in the second half (H2) of 2023. The Q3 2024 earnings forecast suggests a turnover of N13.05 billion, reflecting a 35 percent decline from the N20.05 billion revenue achieved in Q3 2023. Additionally, the company anticipates a revenue of N12.65 billion for the fourth quarter of 2024, a 13 percent decline from the N14.46 billion recorded in Q4 2023.
While the forecast indicates a significant year-on-year decline in pre-tax profit, the impact on net income is less pronounced. The projected net income for H2 2024 is N3.07 billion, a 31 percent decline from the N4.45 billion posted in H2 2023.
Impressive H1 Offsets Uninspiring Second Half
The company’s strong performance in the first half of 2024, with a turnover of N75 billion in six months,
partially offsets the less promising financial projections for the second half of the year. In the first half of 2024, Okomu Oil Palm posted a revenue of N75 billion, marking an 85 percent year-on-year increase from the N40.6 billion reported in H1 of 2023.
During this period, the company achieved a pre-tax profit of N29.3 billion, reflecting a 28 percent year-on-year growth from the N22.9 billion posted in H1 2023.
The company also paid an interim dividend of N8 per share to its shareholders, underscoring its strong first-half performance.
A review of Okomu’s revenue trend shows that the first quarters of most years tend to be the company’s best-performing period, with 2024 being no exception. In Q1 2024, the company posted its highest-ever quarterly turnover of N43.5 billion, followed by a revenue of N31.5 billion in the second
quarter.
Oladapo Odufale, a plant breeder at the Nigerian Institute for Oil Palm Research (NIFOR), explained to BusinessDay that, “In an oil palm, the female inflorescences, which develop into fruit, are produced during the rainy season. These fruits mature within six months, which tend to coincide with the harmattan, basically the first three months of the year.”
