The re-occurrence of smuggling of cheaper palm oil into the country and falling CPO prices in the early part of the year played a major role in the financial performance of agricultural sector player (Okomu Oil and Presco) as seen in their 9M-2019 financial performance. The revenue for 9M-19 decline y/y by 6.8% and 5.2% for Okomu Oil and Presco respectively. The bottom-line for the 9M-19 also followed suit to decline by 43.2% and 3 4.3% for Okomu Oil and Presco respectively.
However, despite the unenthusiastic 9M-19 financial performance for the sector, the Q3-19 financial performance of the sector responded to the positivity seen in that sector during the third quarter standalone performance. The third quarter stand-alone was enthusiastic, and this was buoyed by the partial border closure by the President which begins in August and also rising CPO prices across the globe. Both topline and bottom-line grew save for presco bottom-line that experienced a decline. Revenue for the third quarter standalone grew by 8 6% and 6% for Okomu Oil and Presco respectively when compared with 2018 third quarter standalone figure. Okomu oil bottom-line also grew by 2 2% while Presco declined by 5 1% owing to an increase in the cost of sales and Opex.
Looking into 2020, we see a potential for further upside in sales volume, especially on a domestic level as there is a tendency for demand surge due to the complete border closure and favourable government policies toward the sector portent our positive outlook for the sector and the players therein.
United Capital Plc