Major oil palm producers, Okomu Oil and Presco have reported impressive revenue growth largely on the back of inflationary pressures for the most part of 2021. The two companies reported a combined N85 billion in revenues for the 12 months in 2021, a 79.03% increase when compared to the N47 billion reported in the corresponding period of 2020.
However, taking an individual look at each company reveals that while Okomu Oil generates some of its revenue from the export of rubber along with local sales of oil palm, Presco Plc sticks solely to local sales of its products.
Despite this, Presco generated more revenue than its industry peer, Okomu oil, in 2021. Both companies posted impressive gross margins with Okomu Oil Plc outperforming Presco Plc. Okomu Oil led with 69% while Presco followed closely behind reporting 66% in gross margins in 2021 full year.
Comparison of both companies’ results
Okomu Oil Plc
Okomu, the largest oil palm-producing company by market capitalization, generated the second-largest revenue of both companies, posting approximately N37.46 billion for FY 2021, accounting for 44% of the total revenue generated. The company grew its revenue generation by 60% when compared to the N23.41 billion generated in 2020. Okomu’s full-year revenue is its highest in 5 years.
Compared to the first two quarters of the year, the company’s revenue experienced a decline in Q3 and Q4 2021 mainly due to reduced demand and the fact that Q1 and Q2 are peak seasons for the company, according to the CEO, Graham Hefer. Revenue reported during each period was N12.55 billion, N11.07 billion, N7.42 billion and N6.41 billion, in the respective quarters.
In the last quarter of the year, the company witnessed a surge in the direct cost of production as cost of sales for Oil Palm and Rubber increased by 48% and 87% respectively, resulting in a gross loss of over N2 billion naira, similar to the corresponding period of 2020.
Okomu Oil ended the year with a Profit After Tax (PAT) of approximately N14.04 billion, up 80.50% when compared to its full-year result in 2020. The company has an earnings per share of N14.72.
Presco Plc generated N47 billion for the full year, accounting for approximately 56% of the total revenue generated. The company recorded an impressive improvement in its revenue generation by 98% when compared to the N24 billion generated in 2020.
The company’s performance can be attributed chiefly to a significant increase in the prices of commodities as well as improved demand during the period, hence contributing to topline growth.
Quite similar to Okomu, the company’s cost of producing oil palm during the year spiraled by over 100%, resulting in a lower gross margin and revealing inefficient cost management practices. Fortunately, this had a minimal effect on the net profit reported at the end of 2021.
Presco Plc ended the year with a Profit After Tax (PAT) of approximately N19 billion, up 258.57% when compared to its full-year result in 2020, with an Earnings per share of N18.87.
What you should know
Okomu Oil Palm Plc has a market capitalization of N121.91 billion and is currently valued at N127.80. The company’s share price has declined by 10% from year-to-date.
Presco Plc has a market capitalization of N104.00 billion and is currently valued at N104.00. The company’s share price has advanced by 18.45% from year-to-date.
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