Analysts at CardinalStone have forecast a promising outlook for palm oil companies Okomu Oil and Presco in 2025, projecting better operational health, specifically an EBITDA margin of 53.8%.
This information was disclosed in their recent Equity Research report on oil palm, published on March 17, 2025, titled “Prices to Remain Elevated in H1’25 on Supply Constraints.”
According to them, improved EBITDA margins, which reflect better operational health, are projected to reach a five-year average of 54.59%, compared to a historical average of 50.0%.
The analysts also noted that the moderation of inflation in 2025 is expected to alleviate cost pressures, which both companies have managed effectively so far, helping them retain their profitability margins.
They stated, “In FY’24, general expenses for Okomu surged by 76.5%, while Presco saw a 58.1% increase. However, despite these rising costs, both companies experienced little to no margin contraction, supported by strong topline growth.”
In addition, “A high base effect of costs and a more stable foreign exchange environment are expected to ease cost pressures for both companies.”
CardinalStone also estimated that Presco’s crude palm oil output would reach 53,612 tons in 2025, reflecting a significant 72.6% year-on-year increase, while Okomu Oil is expected to produce 79,997 tons in 2025.
Reasons for increased output
According to the analysts, Okomu is set to significantly increase its Crude Palm Oil (CPO) production due to improved extraction rates and better yields from its mature oil palm trees.
- Although the company has no land for new planting or expansion—since all trees in Extension 2 are mature—Okomu’s output is still expected to grow.
‘’Historically, the extraction rate has been between 20% and 22% of Fresh Fruit Bunch (FFB) weight, but advancements could raise this to 23% to 24% over the next five years. As a result, CPO production is projected to reach 79,997 tons by 2025, with an average annual output of 98,767 tons.’’
- For Presco, they remained optimistic about the company’s growth following its acquisition of the Ghana Oil Palm Development Company (GOPDC).
‘’This strategic move has added 21,000 hectares of land and introduced a new 60-metric-ton-per-hour oil mill to its operations.’’
Consequently, CPO production for Presco is expected to rise to 53,612 tons in 2025, marking a 72.6% increase, with an average of 72,863 tons anticipated over the next five years.
Fate of local price
According to the report, experts predict that the local price of palm oil may remain elevated in 2025, driven by sustained demand in cosmetics and industrial applications, as well as increased food consumption from a growing population.
- They noted that, while foreign exchange pressures appear to be easing, exchange rates could still impact pricing.
As stated in the report, “Despite being one of the world’s largest producers of palm oil, Nigeria still depends on imports for more than half of its domestic demand. Consequently, importers can exert considerable influence over prices, leading to currency fluctuations being directly passed on to consumers through higher costs.”
- However, this situation may present a win-win for local oil palm producers, who could benefit from increased domestic demand and a bullish global CPO market.
The report forecasts that CPO prices will average approximately N1,780,067 per ton in 2025, compared to N1,554,608.58 per ton in 2024, indicating a promising outlook for the market.
