The combined profit of Presco Plc and Okomu Oil Palm Company Plc, two leading quoted agricultural firms rose by 94.32% during the first quarter of 2024 amid volatility in the economy.
The rise in profits is attributed to inflationary pressures and the depreciation of the Naira which has led to astronomical rise in prices of agricultural products in the country.
According to the companies’ latest financial statements, tracked by Nairametrics, the companies’ after-tax profit grew to N39.135 billion in Q1 of 2024 from N20.139 billion in the corresponding period of 2023.
In terms of revenue, the top palm oil producers raked N80.027 billion from N46.122 billion in 2023.
Further analysis revealed that Okomu recorded N39.299 billion in revenue from the local market (Nigeria) and N4.183 billion from export sales, accounting for a total revenue of N43.482 billion during the period under review while Presco recorded revenue from only local sales which was N43.482 billion.
Presco recorded 94.13% growth in sales revenue to N42.545 billion from N21.915 billion in 2023 while Okomu oil reported 115.91% in sales revenue to N43.482 billion in 2024 from N24.207 billion in Q1’2023.
Due to the depreciation of the Naira and other macro-economic inflationary pressures, especially in the domestic market, food inflation has heightened spiraling prices of food items.
Food Inflation
In May 2024, Nigeria’s food inflation rate reached 40.66% on a year-on-year basis, a significant increase from the 24.82% recorded in May 2023. It is also higher than the 40.53% recorded in April 2024.
This sharp rise in food prices has been attributed to a range of factors affecting various food categories.
The items contributing most to this inflation include Semovita, Oatflake, Yam flour pre-packaged, Garri, Bean, etc (which are under Bread and Cereals Class), Irish Potatoes, Yam, Water Yam, etc (under Potatoes, Yam and other Tubers Class), Palm Oil, Vegetable Oil, etc (under Oil and fat), Stockfish, Mudfish, Crayfish, etc (under Fish class), Beef Head, Chicken-live, Pork Head, Bush Meat, etc (under Meat class).
However, on a month-on-month basis, food inflation in May 2024 was recorded at 2.28%, a decrease from the 2.50% recorded in April 2024.
Breakdown of the performances
- A cursory look at the financials showed that Presco Plc’s profit after tax rose by 141.47% to N24.055 billion from N9.962 billion in 2023.
- Revenue sales grew by 94.13% from N21.915 billion to N42.545 billion in 2024. Cost of sales was N8.747 billion as against N5.697 billion reported in 2023, representing a growth of 53.54%.
- The cost of sales gulped 20.56% of the total revenue of the company.
- Presco closed trading on Wednesday, June 19, 2024 at N359.00 per share recording a 4.1% gain over its previous closing price of N345.00.
- Okomu Oil Plc grew profit after tax by 48.18% to N15.080 billion in Q1’ 2024 from N10.177 billion recorded in 2023.
- Revenue rose to 115.91% in sales revenue to N43.482 billion in 2024 from N24.207 billion in Q1’2023.
- However, the cost of sales grew by 135.12% to N10.324 billion from N4.391 billion in 2023. The cost of sales represents 23.74% of the total revenue.
- Okomu closed trading day at N265.00 per share, recording a 3.6% gain over its previous closing price of N255.70.
What you should know
Over dependent to oil and gas as major source of revenue has continue to remain major factors that contributed to Nigeria’s inability to meet up with the global rise in demand for palm oil.
Aside from the likes of Presco Oil Plc and Okumo Oil Plc, two big commercial operators in the Nigerian palm oil sector, the country’s oil palm industry is dominated by smallholders and to lesser extent semi-mechanized and mechanized processors.
Smallholders and semi-mechanized palm oil processors account for about 95% of the total domestic production. For effective production, the role of the drivers is essential. These include farmers, processors, marketers/consumers and equipment fabricators.
For Nigeria to be able to increase her share of domestic production reduces importation and produce palm oil with improved quality, the challenges of the drivers need to be addressed