The Chief Executive Officer of Okomu Oil Palm Plc, Graham Hefer, has announced the commissioning of the company’s latest acquisition, an extension oil processing facility in six weeks, which is mid-September.
According to the CEO, the extension is one of two new processing mills both of which have the capacity to produce 60 tonnes p/h of crude oil palm a day. He further states that the second processing mill will be up and running by the end of 2022 or early 2023 and estimates that in two to four years the company would see a significant increase in the output of crude palm oil going to 80,000 – 90,000 tonnes per annum.
The company’s plans for expansion comes as a welcome development as its quoted competitor, Presco Plc, operating in the same industry of oil palm extraction, in addition to refining crude oil palm, recently announced authorization for the company to raise capital through issue of debt instruments, to enhance expansion.
The direction of expansion and the mode of capital raise, however, has not been announced since the disclosure was released last month. However, while Okomu oil focuses mainly on the extraction and processing of oil palm for local sale and export of rubber to generate its revenue, Presco engages in the refining and fractionation of crude palm oil into vegetable oil and other finished products as part of its operations.
Meanwhile, in an interview with CNBC network, the CEO addressed drivers of Okomu Oil revenue for the H1 period of the year. According to him, the increase in prices of commodities contributed to the increase in revenue, to the tune of 75% year-on-year while profit after tax for the same period appreciated immensely by 138%.
Increase in yields also supported profit for the period as already existing mills ramped up production thanks to increase of under mature crops. Compared to Q1, the Q2 revenue declined because the first few months of the first quarter are the peak seasons for the company and as the second quarter approaches, the company begins to exit the peak season as the purchase of commodities such as palm oil declines.
Commenting on the projection for the rest of the year, Mr Hefer, stated that the lack of disposable income and persistent increase in prices will naturally affect sales as people will no longer be able to afford products. “As the country exits the recession, we hope people will be able to ramp up demand for our products as the local market is taking everything we produce at the moment,” he said.
Furthermore, he addressed the reason for the lack of participants in the industry, apart from Okomu Oil Palm Plc and its peer, Presco Plc. According to him, the lack of participation is due to infrastructural issues, problems like double taxation and port issues, which are areas of concern and which create a difficult environment for businesses to thrive.
“In addition, lack of forex has made foreign investors hesitant to bring funding into the country and penetrate the industry as there are concerns surrounding the difficulty to repatriate funds back to their home countries,” he said
What you should know
- Okomu Oil Palm Plc declared 69.27% growth in Q2 turnover, meanwhile, post-tax profit advanced by 115.15% in the second quarter from N1.98 billion in the corresponding quarter of 2020 to N4.26 billion in the current period.
- The company has a market capitalization of N104.93 billion and is currently valued at N110.00.
- Okomu Oil’s share price has appreciated by 20.88% from year-to-date.