Nigeria’s palm oil makers fly high in first results of 21
In recent financial statements for the period ended March 2021, top players in Nigeria’s palm oil industry have emerged winners amid what could be Nigeria’s gradual economic recovery.
Okomu Oil Palm Company and Presco PLC, the largest players in Nigeria’s oil palm space collectively recorded a revenue increase of 66 percent year on year in the first quarter of 2021 reaching N20.4 billion from N12.3 billion in 2020.
Okomu Plc had a revenue surge of 80 percent growing to N12.5 billion from N6.9 billion in the previous year. Local sale of its products contributed the most to its revenue with N11.3 billion while its export sales accounted for a marginal N1.22 billion.
Similarly, its gross profit grew by 79 percent to N12 billion in the period under review from N6.7 billion in 2020, Its profit before tax improved by 130 percent moving to N6.9 billion from N3 billion in the same period of 2020.
After a tax payment of N1.69 billion in 2021, the firm recorded profit growth of N5.2 billion, representing a 160 percent increase from the N2 billion achieved in the corresponding period of 2020
Experts believe that the oil makers are still reaping benefits of the policies established by fiscal and monetary authorities especially the ban placed on accessing forex for palm oil importation into the country and the impact of the border closure exercise, which has encouraged patronage of locally made products.
In addition to this, both companies revenue increased tremendously on the back of increased demand for their products, which has been a trend since the outbreak of the COVID-19 pandemic as consumer’s preference for essential products rather than luxurious product grew.
Presco as well experienced stellar growth in its financial performance achieving a 114 percent increase in its profit for the period moving from N1.8 billion in 2020 to N3.84 billion in 2021, despite a 100 percent increase in its tax payment in 2021 worth N1.1 billion, as against the N553 million paid in the same period of 2020.
Its revenue and gross profit as well experienced remarkable growth. In 2021 Presco’s revenue grew by 47 percent to N7.9 billion from N5.3 billion in the corresponding period of 2020.
Its gross profit in 2020 was N4.1 billion, however, it experienced an upward tick to N6.4 billion in the period under review representing a 53 percent increase. Its profit before tax surged by 110 percent to N4.9 billion in 2021 from N2.3 billion in 2020.
According to PricewaterhouseCoopers (PwC), in its Palm Oil report, Nigeria is ranked fifth position among the top palm oil-producing countries in the world with less than two percent market share producing 1.03 million metric tonnes. The report also revealed that Nigeria has two major players who are Okomu Plc and Presco Plc
PwC also notes that major challenges affecting the palm oil industry include smuggling, outdated farming techniques, inadequate funding, substandard mills, and poor storage facilities resulting in post-harvest losses.
Nigeria is the largest consumer of palm oil in Africa, with demand predominantly propelled by household consumption as 90 percent of palm oil consumption comes from the food industry while the non-food industry accounts for 10 percent.