Okomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020

Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

Audi electrifies FC Bayern Munich (Photos)

Enabled by the partnership with Audi: FC Bayern Munich is the first international football club to drive using electric...

Naira Further Depreciates against the USD at the BDC, Parallel Markets

In the just concluded week, Naira weakened further against the USD at the Bureau De Change and the parallel...
- Advertisement -

Okomu Oil Palm Company Plc, one of Nigeria’s leading producer of Oil Palm and Rubber crash crops for local and exports consumption in its H1’2020 financial statements published on the Nigerian Stock Exchange (NSE) website on Tuesday 28th July 2020, grew its Turnover (Revenue) and Net-Income (PAT) by 57.92% and 58.44% respectively compared to the corresponding period in 2019.

Drivers of the strong Revenue performance

  • The impressive Revenue performance reported by the company (especially from Oil Palm sales) was mainly driven by the 74.6% increase in local sales to ₦12.42 billion, compared to ₦7.11 billion reported in the corresponding period of 2019.
  • The strong leap in local sales (we suspect) was driven by the decision of the Nigerian government to shut all her land borders with neighbouring countries since August 2019, to curb smuggling of cheap but inferior substitute from these countries.
  • Besides, we also noticed that earnings from export sales dropped by 23.94% to ₦1.10 billion in H1’2020 amid a surge in demand from local consumers and the reduced average price of Oil Palm in the international market to MYR 2,450/T as against MYR 2,558/T in the corresponding period of 2019.

Okomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020

Cost of sales tapered despite increased Turnover, boost Profit Margin significantly

  • Despite the significant jump in the company’s revenue from sales in the period relative to the prior year, its Cost of Sales for both Oil Palm and Rubber products tapered by 29.09% (to ₦996mn) and 69.77% (to ₦86.63mn) respectively compared to H1’2019.
  • This we believe was supported by the gains from capacity expansion effort of the company which has recently resulted in a 4,000 hectares expansion of its Oil Palm plantation and a 1,500 hectares increase of Rubber plantation.
  • Resultantly, Gross Profit Margin strengthened significantly, appreciating by 81% to print at ₦12.44 billion against ₦6.87 billion reported in the corresponding period of 2019.

Acquisition of New Loans for PPE drove Finance Cost up

  • There was a 207.25% jump in the company’s finance cost to ₦310 million when
    compared to the corresponding period in 2019.
  • This (we suspected) was due to a 52.7% or ₦1.27 billion increase in New Loans (to ₦2.63bn), used in the acquisition of new Property, Plant, and Equipment (PPE) worth ₦1.97 billion in the period.
Read Also:  Okomu Oil Palm Co Plc Rewards Whistle Blowers

PBT, PAT, and EPS finished strong.

  • As a result of the impressive performance of the company’s earnings and cost items, Pre-profit Tax (PBT), Net-income (PAT), and Earnings per share (EPS) reported in H1’2020 rose by 94%, 58.4%, and 58.5% respectively to settle at ₦5.5 billion, ₦4 billion, and ₦4.2k compared to ₦2.83 billion, ₦2.53 billion, and ₦2.65k in the corresponding period of 2019.

Balance sheet and Net Cash Flow gained further momentum.

  • The company’s Current Ratio for the period printed at 2.41:1 against 2.20:1 in
    H1’2019. This suggests that more easily than in the corresponding period of 2019, the company can offset all its short term obligations without experiencing a strain.
  • Besides, the company’s Leverage ratio of 0.58:1 implied that its Total Asset value is almost twice as its Total liabilities. Hence, this suggests that the company is financially stable.
  • For the Cash Flows analysis, the company’s Net Operating Cash Flow jumped 716.5% from ₦662.91 million in H1’2019 to ₦5.41 billion in H1’2020. This development (despite reporting negative Net Investing and Financing Cash Flows) drove the company’s Free Cash Flow up by 207.8% to ₦5.46 billion compared to ₦1.77 billion in H1’2019.
Read Also:  SOFT DRINKS MANUFACTURER NICHOLS REVEALS IT NOW EXPORTS TO 35 COUNTRIES IN AFRICA

12-months outlook for the Business

  • Despite the threat posed by the COVID-19 pandemic on the broader macroeconomic the environment in Nigeria and across the globe in the near term, we maintain a positive outlook for the business of Okomu Oil Palm over the next 12-months period due to its increasing maximization of the domestic market potential.
  • We believe the business will continue to benefit from the protracted land border closure by the federal government and the increased funding of the agricultural sector by the current administration in its effort to diversify the Nigerian economy away from crude oil.
  • Hence, we make an upward review of our 12-months target price for Okomu Oil Palm Plc to ₦74.80 from the ₦63.20 set in the 2019 financial year.

GTI Research

- Advertisement -
Okomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020 - Brand SpurOkomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020 - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Okomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020 - Brand SpurOkomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020 - Brand Spur

Latest News

Nigerian Government doing a poor job on water/sanitation and health care, citizens say.

Even before the COVID-19 pandemic, a majority of citizens say they went without needed medical care and clean water...

Polaris Bank Appoints Segun Opeke as Executive Director

Polaris Bank Limited has announced the appointment of Mr. Segun Opeke as an Executive Director of the Bank by the Board of Directors and...

Nosir Releases the New Music Project, ‘My Episode’

The new record features 10 hip-hop tracks that admit his rap prowess. 20 September 2020 - Nosir, rap artist and founder of Spade Gospel...

Mega deals as Konga Freedom Sales goes live today

All is set for the 2020 edition of the Konga Freedom Sales, an annual promotion by the foremost composite e-Commerce giant targeted at celebrating...

Audi electrifies FC Bayern Munich (Photos)

Enabled by the partnership with Audi: FC Bayern Munich is the first international football club to drive using electric power. The stars of the...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Okomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020 - Brand SpurOkomu Oil records N4bn profit, pays N1.92bn dividend in H1 2020 - Brand Spur