Okomu Oil Palm Plc made a moderate loss of about N300 million in the final quarter of its 2023 operations, which scraped the bottom line from roughly N21 billion at the end of the third quarter to close with N20.6 billion at full year.
The loss in the final quarter is way off the company’s profit target of N2.3 billion for the period – which had been expected to top up profit for the year to over N23 billion. The final quarter loss is occurring for the oil palm and rubber producing company for the second year, reflecting the company’s off-season impact on earnings.
In 2022, the company’s closing third-quarter profit of N18 billion equally went down to N16 billion for the full year. While the final quarter disappointed in profit, it overshot on sales revenue target. Turnover for the quarter amounted to N14.5 billion, a clear N1 billion ahead of the forecast figure of N13.5 billion for the quarter.
The company’s audited financial report for the full year ended December 2023 shows that the weakness in the closing quarter came from kinks on two major expense lines. One is finance expenses, which jumped from N2 billion at the end of the third quarter to N3.7 billion in the full year.
From the closing mark of N1 billion in 2022, finance cost multiplied well over three times in 2023 while finance income was insignificant. This is despite some reduction in interest-bearing debts from almost N10 billion to N9.4 billion in the year.
The other pressure point came from income tax expenses that jumped from a little over N8 billion at the end of the third quarter to over N13 billion for the full year.
Okomu Oil Palm grew sales revenue by 26.6 percent to slightly over N75 billion at the end of the year with oil palm produce accounting for over 89 percent of sales. Sales of rubber however improved its contribution to sales revenue from 9.3 per cent in the preceding year to 10.6 per cent in 2023.
The company reaped a windfall of almost N11 billion in other income compared to less than N1.8 billion figure in 2022. About N4.8 billion of the figure consists of foreign exchange gains compared to less than N75 million in 2022.
The production cost of N12.5 billion in the full year is a drastic cut from the third quarter figure of almost N19 billion. With that, the cost of sales reversed from revenue-consuming to offering a big cost-saving advantage. Compared to the 26.6 percent growth in turnover, input cost grew by 6.6 percent in the year, lowering its claim on sales from about 20 percent in 2022 to 16.7 percent at the end of 2023.
Other cost increases that pressured margins in the year include other expenses that rose by more than 43 percent to N15.7 billion, depreciation charges that advanced by 95 percent to over N7 billion, and personnel costs that grew by 26.4 percent to N13 billion.
The company closed the year with a pre-tax profit of N33.8 billion, up by almost 44 percent from N23.5 billion in 2022. After-tax profit grew less rapidly at 27 percent to N20.6 billion due to a tax expense surge from N7.3 billion in 2022 to over N13 billion in 2023. The profit margin is virtually unchanged at 27.5 percent at the end of the year.
Okomu Oil Palm earned N21.64 per share at the end of 2023 operations, up from N17.02 per share in 2022.
The company has announced a final cash dividend of N14 per share to shareholders in addition to an interim of N4.50 per share.
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