Okomu Oil Palm Plc maintained an outstanding profit growth for the third year running with an after tax profit of N18 billion at the end of the third quarter, about 29 percent ahead of the closing profit of N14 billion the company posted for the 2021 full year.
The interim financial report of the oil palm and rubber producing company at the end of September 2022 shows that it is maintaining an upswing in the bottom line for the third straight year.
The company has elevated after-tax profit from N5.4 billion in 2019 to N7.8 billion in 2020, accelerating to N14 billion in 2021 and climbing further to over N18 billion in the nine months of the 2022 financial year.
The sustained high profit growth in the current year is despite a drop of 41 percent in after tax profit quarter-on-quarter to N1.2 billion in the third quarter. The company’s challenge in the third quarter came from the cost of sales that multiplied about four times quarter-on-quarter to N4.7 billion.
The high jump in the cost of sales compares to an increase of 27 percent in sales revenue to N9.4 billion over the same period. The cost-income imbalance slashed gross profit by over 24 percent to N4.7 billion for the third quarter.
The company’s management responded with cost saving steps that cut net operating expenses by 13.5 percent to N3.3 billion for the quarter. Despite that, operating profit still went down by close to 42 percent quarter-on-quarter to N1.3 billion.
Some support came from tax credits and relatively low net finance expenses that prevented a wider margin of profit decline for the quarter than recorded.
The company’s year-on-year performance reflects the much stronger earnings numbers of the preceding two quarters. Sales revenue closed at over N50 billion for the nine months of trading, which is an outstanding growth of 61.6 percent. The figure already towers ahead of the closing turnover figure of N37.5 billion for the 2021 full year.
Export sales which grew by over 91 percent to N5.6 billion at the end of last year, reversed sharply to a slight decline year-on-year at N3.9 billion at the end of the third quarter.
Soaring cost of sales remains the company’s big issue for the year so far. It jumped more than four and half times to N14.4 billion at the end of the third quarter, already above the closing cost of sales figure of N11.6 billion for the entire 2021 financial year.
The major incursion of input cost on sales revenue limited the increase in gross profit to 28 percent to N35.8 billion at the end of September 2022. A moderating force came from a drop of about 18 percent in net operating expenses, which closed at N10.7 billion at the end of the review period.
The cost saving from net operating expenses boosted operating profit to an increase of 68.7 percent to over N25 billion at the end of the third quarter.
Despite a massive increase in net finance expenses from only N57 million to about N482 million and a jump of 104 percent in tax expenses to N6.6 billion over the review period, the company still achieved a profit advance of 55.6 percent to N18 billion at the end of the third quarter.
Okomu Oil Palm earned N18.92 per share at the end of the nine months of operations, advancing from N12.16 per share in the same period in 2021. It paid out a cash dividend of N8 per share to shareholders at the end of last year’s trading.
Comments are closed.