Okomu Oil Plc started the opening two quarters of the year brilliantly, recording impressive profit positions in billions of Naira.
However, the company reported a meagre N991.69million as profit in Q3 2020, failing to hit the billion-mark seen in the previous quarters.
The lacklustre Q3 2020 performance eroded the accolades Okomu Oil Plc had garnered in the early stages of 2020. It makes you wonder if the company merely flattered to deceive with its stellar H1 performance.
Revenue dropped 27% from N6.98billion in Q3 2019 to N5.09billion in Q3 2020 and consequently, profit after tax suffered severely. This dip in revenue was partly sponsored by the company’s inability to generate substantial returns from its fixed deposit investments.
A holistic review of the report, combining all concluded quarters so far this year, only captures improvements. But, could this be deceptive and is it sustainable?
For instance, revenue rose to N18.62billion for 2020 9M from N15.54billion in 2019 9M. However, the profit position declined in every single quarter of 2020.
In Q1 2020, Okomu Oil Plc made a profit of N2.03billion, higher than the N1.58billion in Q3 2019. In Q2, profit dropped to N1.98billion and took a major dip in Q3 to N991million.
Last year, performances improved with each passing quarter; whilst this year, it is the exact opposite.
There are growing concerns as to how bad and how long this deterioration will last. At this pace, it is not out of place to suspect a worsened position in Q4, if these concerns are not immediately addressed.
The unimpressive tale of the quarter-by-quarter reduction in profits this year is also witnessed in its costs of sales, which has worryingly continued to spike.
In Q3 alone, the cost of sales was up to N1.08billion, almost equalling the combined amount spent in Q1 (251.9million) and Q2 (830.9million) – N1.18billion.
So far this year, Okomu Oil has forked out N2.26billion in total to cover the cost of producing oil palms and rubber.
These huge costs have impacted on the cost of its goods in the local market, with palm oil and other agricultural food items priced as gold.
For Okomu Oil Plc to advance and maintain its growing and lofty reputation, it must return to the drawing board and check the excesses that may have triggered its deteriorating numbers.
By full-year 2020, their FY performance could play out to be a dour game of 2 halves, with the first being remarkable and the last, largely forgettable.