Okomu Oil Palm Q3 profit up 28.57% on reduced costs

NIGERIA – Okomu Oil Palm Company plc (OOPC) third quarter profit has risen by 28.57 percent on reduced costs, analysis of the financial statement shows.

NIGERIA – Okomu Oil Palm Company plc (OOPC) third quarter profit has risen by 28.57 percent on reduced costs, analysis of the financial statement shows.

The Company’s impressive profit growth may have beaten analysts’ earlier expectations that the drop in global prices of palm oil will erode income of the company.

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For the first nine months through September 2014, Okomu’s net income increased by 28.57 percent to N2.07 percent from N1.61bn in the earlier quarter (Q3) 2013.

The impressive results at the bottom line was fuelled by effective and efficient cost control mechanisms put in place by management that saw operating expenses  reduce by 26.12 percent to N1.79bn.

Additionally, cost of sales were down by 6.38 percent to N2.93bn in Q3  2014 as against N3.13bn last year while cost of sales margin reduced to 42.52 percent in the review  from 46.16 percent last year.

Okomu’s revenue in the period under review rose by 1.61 percent to N6.89 billion from N6.78bn last year despite local prices lagging behind global prices.

“Global prices declined by about 8 percent between April and June this year,” said Olajumoke Okeowo, equity research analyst FBN Capital in an email note.

“We assume the modest pick-up in volumes may have offset the price declines,” said Okeowo.

The Company’s pretax margin moved to 30.04 percent in Q3 2014 as against 23.77 percent as at Q3 2013. Earnings per share EPS also increased by 8.5 percent to 217k in the period under review compared to 200k last year.

Total assets were up by 8.49 percent to N32.84bn from N30.27bn the preceding year.

OOPC earlier in the year said it will unveil a N2.5bn oil palm mill before the end of 2014. The mill would be one of the largest plants in Africa.

The company will also plant at least 10,000 hectares of oil palm within the next three years and thereafter install a new milling technology with tilting sterilisers that will process the Fresh Fruit Bunches (FFB) produced and increase its milling capacity from 30 tons per hour to 60 tons per hour.

OOPC’s share price closed at N29.72 percent on the floor of NSE while market capitalisation was N28.35bn.

“We therefore envisage that the pick-up in prices will feed into local prices and impact positively on Q4 sales,” said Okeowo.

November 21, 2014; http://businessdayonline.com/2014/11/okomu-oil-palm-q3-profit-up-28-57-on-reduced-costs/#.VG7L_GejKVo

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