Okomu Oil Palm Plc has reported a pre-tax profit of ₦52.05 billion ($56.4 million) for the 2024 financial year, marking an impressive 58% increase from ₦32.85 billion ($35.6 million) in 2023, according to its recently released unaudited financial report.
The sharp profit growth was fueled by a surge in revenue, which rose 73.44% to ₦130.06 billion ($141 million), up from ₦75.10 billion ($81.4 million) in 2023.
The company credited this expansion to higher local sales of crude palm oil and rubber, which contributed over 82% of total revenue. Local sales climbed to ₦107.54 billion ($116.6 million), up from ₦67.04 billion ($72.7 million) in 2023, reflecting stronger market demand.
Key Financial Highlights (2024 vs. 2023)
- Revenue: ₦130.06 billion ($141 million), up 73.44%
- Cost of Sales: ₦48.48 billion ($52.6 million), up 75.6%
- Gross Profit: ₦81.57 billion ($88.6 million), up 72%
- Operating Expenses: ₦30.78 billion ($33.4 million), up 78%
- Operating Profit: ₦50.79 billion ($55.1 million), up 69%
- Net Finance Income: ₦1.26 billion ($1.37 million)
- Pre-tax Profit: ₦52.05 billion ($56.4 million), up 58%
- Taxation: ₦17.77 billion ($19.3 million), up 52%
- Profit After Tax: ₦34.28 billion ($37.2 million), up 61.9%
- Earnings Per Share (EPS): ₦35.93 ($0.04), up 61.9%
What’s Driving Okomu Oil’s Growth?
1. Strong Local Demand for Palm Oil and Rubber
Okomu Oil’s revenue jump to ₦130.06 billion was largely due to the high demand for crude palm oil in Nigeria, supported by:
- Mature palm trees ensuring steady supply
- Smallholder farmers contributing to production
- Favorable pricing strategies
Domestic sales made up 82.6% of total revenue, while export sales surged to ₦22.5 billion ($24.4 million), up from ₦7.5 billion ($8.1 million) in 2023—showing a growing international appetite for Nigerian palm oil.
2. Strong Profit Margins Despite Rising Costs
Even with total costs rising 76.5% to ₦79.21 billion ($85.9 million)—driven by higher cost of sales (₦48.48 billion) and operating expenses (₦30.78 billion)—Okomu Oil maintained a strong gross profit margin of 62.7% (vs. 63.2% in 2023).
This means the company efficiently managed costs while maximizing revenue, making it attractive for investors.
3. Foreign Exchange Gains Boosting Finances
Despite mounting foreign exchange (FX) losses, Okomu Oil managed to record a net finance income of ₦1.26 billion ($1.37 million), largely thanks to FX gains from export proceeds.
This allowed the company to capitalize on Nigeria’s forex scarcity and strengthen its financial position while reinforcing its role in the country’s import-substitution strategy.
Okomu Oil’s Stronger Financial Position and Shareholder Value
- Return on Assets (ROA) improved to 28% (from 22%), meaning the company is more efficient in using its assets.
- Return on Equity (ROE) surged to 257% (from 193%), reflecting higher profitability and stronger shareholder value.
- Equity Ratio rose slightly from 41% to 42%, indicating a higher proportion of assets funded by retained earnings.
- Inventory Turnover Declined to 0.09x (from 0.12x), suggesting slower inventory movement, possibly due to increased stock levels or longer sales conversion times.
- Working Capital Increased from ₦4.55 billion to ₦8.28 billion ($8.98 million), giving the company better financial flexibility to meet short-term obligations.
Final Thoughts: What’s Next for Okomu Oil?
Okomu Oil’s impressive 2024 results show a resilient business strategy, built on:
Strong sales growth
Effective cost management
Improved asset efficiency
Robust financial position
These factors boosted shareholder value and positioned the company for continued profitability and expansion in the coming years.
