Okomu Oil Palm Plc has reported a pre-tax profit of N52.05 billion for the 2024 financial year, according to its recently published unaudited financial report.
This represents a 58% increase from the N32.85 billion recorded in 2023.
The significant profit growth was driven by a sharp rise in revenue, which surged by 73.44% to N130.06 billion, compared to N75.10 billion in the previous year.
The company attributed this revenue expansion to increased local sales of crude palm oil and rubber, which accounted for over 82% of total revenue. Local sales rose to N107.54 billion, up from N67.04 billion in 2023, reflecting heightened market demand.
Key Highlights (FY 2024 vs FY 2023)
- Revenue: N130.06 billion, up 73.44% YoY
- Cost of Sales: N48.48 billion, up 75.6% YoY
- Gross Profit: N81.57 billion, up 72% YoY
- Operating Expenses: N30.78 billion, up 78% YoY
- Operating Profit: N50.79 billion, up 69% YoY
- Net Finance income: N1.26 billion
- Pre-tax profit: N52.05 billion, up 58% YoY
- Taxation: 17.77 billion, up 52% YoY
- Profit After Tax: N34.28 billion, up 61.9% YoY
- Earnings Per Share: N35.93, up 61.9% YoY
Commentary
- Strong demand for crude palm oil and ability of the supply to meet the demand supported by the abundance of mature palm trees, availability of smallholder palm oil farmers and effective pricing, drove full-year revenue to N130.061 billion.
Domestic sales accounted for 82.6% of total revenue, while export sales also increased sharply to N22.5 billion from N7.5 billion in the preceding year.
- However, the company faced significant cost pressures, with total costs rising by 76.5% year-on-year to N79.21 billion. This included a cost of sales of N48.48 billion and operating expenses of N30.78 billion. Despite this, Okomu Oil Palm Plc maintained a strong gross profit margin of 62.7% (compared to 63.2% in 2023), indicating that despite rising expenses, the company successfully retained a significant portion of its revenue as gross profit.
- The company’s capacity to sustain profitability despite rising costs is highlighted by its ability to constrain its cost to revenue generated evidenced by a solid gross profit margin of 62.7% in FY 2024, which is advantageous for investors. This suggests that there is a robust cost management strategy, effective pricing, and strong market demand.
- Despite mounting foreign exchange losses, the company recorded a net finance income of N1.26 billion, driven by foreign exchange gains from export proceeds. These FX earnings helped offset some losses, reinforcing the company’s ability to leverage forex scarcity and solidifying its position as a dominant player in Nigeria’s import-substitution strategy.
Okomu Oil Palm Plc Strengthens Liquidity, Asset Efficiency, and Shareholder Value.
The company’s return on assets (ROA) increased to 28% from 22%, indicating improved efficiency in utilising assets. Simultaneously, the return on equity (ROE) increased to 257% by 2024 from 193%, indicating a significant boost in shareholder value due to higher profitability.
Although the company made significant sales that led to higher profits, the rate at which the company sells its inventory decreased to 0.09x in 2024 from 0.12x in 2023. This indicates a slower inventory turnover, possibly due to increased stock levels or a longer time taken to convert sales.
Regarding the company’s capital structure, its equity ratio increased slightly from 41% to 42%, indicating a modest rise in the proportion of assets funded by shareholders, including retained earnings
Furthermore, the company improved its financial flexibility by increasing working capital from N4.55 billion to N8.28 billion by 2024, allowing it to finance operations and meet short-term obligations.
Okomu Oil Palm Plc’s improved profitability reflects stronger sales marketing, effective cost management, enhanced asset efficiency, and a robust cash position. These factors have contributed to better shareholder returns and positioned the company for sustained growth in the coming years.
