FSDH Initial Reaction: Okomu Oil FY21 results
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February 2, 2022/FSDH Research
Key Performance Highlights:
- On January 28, Okomu Oil published its unaudited FY21 numbers, with a robust operating performance. Revenue grew 60.0% YoY to N37.5 billion in FY21. The revenue growth was primarily driven by a 55.6% YoY jump in the local sales (85% of FY21 sales), further boosted by a 91.3% YoY spurt in exports (15% of FY21 sales). Looking at the quarterly performance, the company recorded a solid 33.8% YoY rise in revenue to N6.4 billion in 4Q21. However, Revenue performance in 4Q21 on a sequential basis was sub-par, with revenue declining 13.6% QoQ.
- Cost of Sales jumped 51.4% YoY to N11.7 billion in FY21, resulting in a 176 bps YoY expansion in Gross Margin to 68.9% in FY21. The cost of sales rose sharply due to an 83.6% YoY increase in rubber cost (16% of the FY21 cost of sales), while palm oil cost (84% of the FY21 cost of sales) increased 46.5% YoY to N9.8 billion in FY21. In 4Q21, the sequential (QoQ) cost of sales shot up 7.0x. It should be noted that the company’s gross margin for 4Q21 came in at a negative 32.6% (4Q20: -15.6%). The company faced elevated cost pressures in 2021, with Net Operating Expenses surging 42.6% YoY to N9.7 billion in FY21. We think the surge in operating expenses reflects the high inflationary environment in the economy. The operating profit grew 80.7% YoY from N8.9 billion to N16.1 billion in FY21. The company went from a net finance cost of N63 million in 2020 to a net finance income of N187 million in FY21. Okomu oil paid an effective tax rate of 13.8% in FY21 versus 12.0% in FY20.
- The company reported a net profit of N14.0 billion in FY21, against N7.8 billion, a year back. Okomu reported an EPS of N14.72 compared to N8.16 last year.The company’s EBITDA and operating margins expanded by 258 bps and 493 bps YoY in FY21.
Market Reaction: The Okomu stock closed unchanged at N142.0, versus a 0.91% gain for the All Share Index (31/1). The stock has been trading flat at N142 for the last seven days.
Okomu Oil Earnings Highlight FY21
Source: Company Financials, FSDH