Despite the offseason slowdown in the final quarter, Okomu Oil Palm Company Plc earned an after-tax profit of N2.4 billion, topping up an impressive third quarter for the oil palm and rubber-producing company and closing its 2021 operations with N14 billion profit.
It was an outstanding year for the company on earnings performance, as we projected in the interim reports that “the oil palm and rubber-producing company is on the course of achieving one of the most impressive earning results in years in the 2021 financial year”.
Triple-digit profit growth the company maintained all through the interims could not extend to a full year, however, as the growth momentum slowed down expectedly in the final quarter. Also, the cost of sales soared in the fourth quarter and undermined profit growth.
The second half, which is the company’s offseason, contributed just one-third of the full year’s profit. The company’s full-year profit figure still represents a top record growth of 80 per cent over the preceding year’s profit of N7.8 billion.
Okomu Oil Palm succeeded in rebuilding profit for the second year after suffering a profit drop in 2019 to N5.4 billion.
The company’s outstanding performance in the year reflects a major gain in profit margin – the ability to convert revenue into profit. It gained a profit margin from 33.2 per cent in the preceding year to 37.5 per cent at the end of the 2021 financial year.
The gain in profit margin reflects the ability to grow sales revenue well ahead of costs. The company grew sales revenue by 60 per cent in the year to N37.5 billion while all costs grew well below the increase in sales.
Export sales led revenue growth at over 91 per cent to N5.6 billion at the end of the year. Domestic sales of close to N32 billion contributed 85 per cent of the company’s revenue at the end of 2021.
Input cost rose by 51.4 per cent to N11.6 billion, showing close to four times advance in three months from the closing figure of N3 billion at the end of the third quarter. The full-year figure still represents a relatively low-cost margin at 31 per cent. This is the company’s key operating advantage, which underlies its high-profit margin.
The relatively low cost of sales powered gross profit – which rose by 64 per cent to N25.8 billion at the end of the year. That is however a drop from the third-quarter gross profit figure of almost N28 billion, reflecting the high jump in the cost of sales in the final quarter.
Net operating cost maintained its moderated moods to a full year at an increase of 4per content to N9.7 billion. The combination of rapid growth in sales revenue with moderated costs is the strategy that saw the company through an exceptional growth in the bottom line in 2021.
With the slowdown in operating expenses, operating profit grew by 8 per cent to over N16 billion at the end of the year. This was reinforced by a positive shift from net finance expenses of N63 million in the preceding year to net finance income of over N187 million in 2021.
Okomu Oil Palm Company closed the 2021 operations with an after-tax tax profit of N14 billion. This is an increase of 8per content over the N7.8 billion profit figure the company posted at the end of the preceding financial year.
The company earned N14.72 per share in the full year, rising from N8.16 per share in the same period in 2020. It is expected to raise its cash dividend from N7 per share it paid for the preceding year when its audited accounts are issued.
Comments are closed.