Nigeria’s two major listed palm oil producers, Okomu Oil Palm and Presco Plc may post lower full-year results due to an increase in imported palm oil. Analysts at ARM disclosed this in a research note recently.
The two firms had bumper 2016 and 2017 results due to a decision by the Central Bank of Nigeria (CBN) to ban importers from the official foreign exchange market at the peak of the country’s foreign exchange crisis. The apex bank took this move, in a bid to conserve foreign exchange.
These concerns have since subsided, and the country is on track to hit $50 billion in reserves before the end of the year. This according to the analysts may have led to an increase in imported palm oil.
On a global level, crude oil palm prices have also dipped.
For Okomu Oil, Q1 and H1 2018 results show an increase year on year, 2nd quarter results show a slight dip. H1 2018 results show revenue increased from N12.4 billion in 2017 to N12.9 billion in 2018. Q2 2018 results, however, show a dip in turnover. Turnover fell from N6.5 billion in 2017 to N5.5 billion in 2018.
Presco’s results take a similar pattern with both H1 2018 and Q2 2018 results showing a decline. H1 2018 revenue fell from N12.8 billion in 2017 to N11.5 billion in 2018. On a quarterly basis, Revenue fell from N5.6 billion in 2017 to N5.0 billion in 2018.
Will dividends dip?
The drop in topline revenue has also led to a slight dip in Earnings Per Share. Okomu’s half-year earnings dropped slightly from N6.54 in 2017 to N6.23 in 2018.
For Presco, the drop in earnings per share has been sharper. EPS for the 1st half of 2018 dipped from N5.55 in 2017 to N3.98 in 2018.
Okomu Oil closed at N73.10 in yesterday’s trading session on the Nigerian Stock Exchange (NSE), down 3.82%. Year to date, the stock is up 8%. Presco Plc closed unchanged at N60 in yesterday’s trading session. Year to date, the stock is down 12.4%.