NIGERIA – Okomu Oil Palm Company Plc and Presco Plc, Nigeria’s largest palm oil producers, have reported a remarkable 254.6% increase in combined profits during the first nine months of 2023, soaring to N44.39 billion (US$53.3 million) from the N12.52 billion (US$15 million) reported in 2018.

A detailed analysis by BusinessDay revealed that the two companies achieved their highest profits in 2023, despite grappling with escalating production costs.

Over the last six years, the analysis showed that the two industry giants demonstrated consistent growth, with their combined earnings escalating by 30.8% to N44.39 billion (US$53.3 million) in the first three quarters of 2023, compared to N33.93 billion (US$40.7 million) during the same period in 2022.

Okomu posted a substantial profit of N20.92 billion (US$25.1 million), marking an 189% increase from N7.24 billion in 2018, while Presco recorded an even more impressive surge of 345%, reaching N23.47 billion (US$28.1 million) from N5.28 billion in 2018.

According to the analysis report, Nigeria’s manufacturing sector has been grappling with escalating operating costs due to foreign exchange illiquidity, high interest rates, and weak infrastructural amenities.

“Despite these challenges, Okomu and Presco have managed to not only navigate the hurdles but also thrive, solidifying their positions as stalwarts in the palm oil production value chain.”

Industry experts attributed this success to the soaring global demand for palm oil.

Alphonsus Inyang, president of the National Palm Produce Association of Nigeria (NPPAN), highlighted the multifaceted uses of palm oil and expressed concern over the government’s lack of investment in developing new palm estates or supporting smallholders.

CardinalStone Securities analysts, in a July 2023 report, emphasized the robust demand for palm oil in Nigeria, noting that despite challenges like a cash crunch, the demand for palm oil has remained strong.

The analysts foresee continued growth in palm oil consumption, driven by factors such as high urbanization rates and the increasing demand for packaged foods containing palm oil.

However, industry players anticipate challenges in the coming year.

Henry Olatujoye, managing director of Palmtrade and Commodities Development Nigeria Ltd, emphasized the need to convert foreign exchange to plantation development to address the demand-supply gap.

Inyang warned of potential impacts on the industry due to lifted foreign exchange restrictions on crude palm oil (CPO) and palm kernel oil, anticipating an influx of these products from neighbouring countries.

“As the palm oil industry continues to flourish in Nigeria, industry players and government stakeholders must collaborate to navigate potential challenges and sustain this impressive growth,” he noted.

“The resilience of Okomu Oil and Presco in the face of rising costs serves as a beacon of success in a challenging economic landscape.”