Okomu Oil Palm Plc has announced a pre-tax profit of N52.05 billion for the 2024 financial year, reflecting a 58% increase from the N32.85 billion recorded in 2023. The company attributed this remarkable growth to a sharp rise in revenue, which surged by 73.44% to N130.06 billion, compared to N75.10 billion in the previous year.
The surge in revenue was largely driven by strong domestic sales of crude palm oil and rubber, which contributed over 82% of total revenue. Local sales climbed significantly to N107.54 billion, up from N67.04 billion in 2023, reflecting heightened market demand. Export sales also experienced robust growth, rising to N22.5 billion from N7.5 billion in the previous year.
Despite the impressive revenue growth, Okomu Oil Palm Plc faced significant cost pressures, with total expenses rising by 76.5% year-on-year to N79.21 billion. The cost of sales grew to N48.48 billion, an increase of 75.6% while operating expenses surged by 78% to N30.78 billion.
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Nevertheless, the company maintained a strong gross profit margin of 62.7%, a slight dip from the 63.2% recorded in 2023. This indicates that, despite rising costs, Okomu Oil Palm successfully retained a substantial portion of its revenue as gross profit, demonstrating effective cost management and strategic pricing.
The company’s operating profit rose by 69% to N50.79 billion, indicating improved management of costs relative to revenue generation. Okomu Oil Palm also recorded a net finance income of N1.26 billion, mainly driven by foreign exchange gains from export proceeds, which helped cushion the impact of mounting FX losses.
After accounting for taxation, which increased by 52% year-on-year to N17.77 billion, Okomu Oil Palm Plc’s profit after tax stood at N34.28 billion, representing a 61.9% increase compared to the previous year. The company’s earnings per share (EPS) also grew by 61.9% to N35.93, reflecting improved returns for shareholders.
The company’s return on assets (ROA) improved to 28% from 22%, indicating better efficiency in utilizing its assets to generate profit. Similarly, the return on equity (ROE) increased to 257% from 193%, signifying a substantial rise in shareholder value as a result of higher profitability.
However, the company experienced a decline in its inventory turnover rate, which fell from 0.12x in 2023 to 0.09x in 2024. This suggests that Okomu Oil Palm took a longer time to sell its inventory, potentially due to increased stock levels or a slower sales cycle.
On the capital structure front, the equity ratio rose slightly from 41% to 42%, indicating a modest increase in the proportion of assets financed by shareholders, including retained earnings. Additionally, Okomu Oil Palm enhanced its financial flexibility by increasing its working capital from N4.55 billion to N8.28 billion in 2024, thereby strengthening its ability to finance operations and meet short-term obligations.
The company’s improved financial performance reflects stronger sales and marketing strategies, effective cost-control measures, enhanced asset efficiency, and a robust cash position. These factors have contributed to better shareholder returns and positioned Okomu Oil Palm Plc for sustained growth in the coming years.
Okomu Oil Palm’s record-breaking earnings come at a time when Nigeria’s palm oil industry is witnessing renewed expansion, with Presco Plc, another major player in the sector, also posting a record pre-tax profit of N128 billion for 2024. The continued growth of domestic palm oil production is expected to generate significant foreign exchange inflows and support Nigeria’s ongoing efforts to diversify its economy.
The surge in Nigeria’s palm oil output is occurring amid supply disruptions in the global market, particularly in Malaysia, the world’s second-largest producer. Malaysia’s palm oil production fell by 17% in January 2024, marking its largest decline in nine years due to heavy rains and flooding that disrupted harvesting. The country’s palm oil reserves also dropped by 7.6% to 1.58 million tons, leading to a tighter supply in international markets.
Nigeria was once a dominant player in the global palm oil industry, accounting for 43% of global production in the 1960s. However, its market share has since dwindled to about 2% today. The country now produces only 1.4 million metric tons annually, while demand stands at 3 million metric tons, forcing Nigeria to spend over N500 billion annually on imports to bridge the supply gap.
However, local companies such as Okomu Oil Palm and Presco Plc are leading a resurgence in Nigeria’s palm oil sector, helping the country reduce its reliance on imports and reinforcing its position in the global supply chain.