October 30, 2023/Cordros Report
The OKOMU Oil Palm Plc (OKOMUOIL) published its Q3-23 unaudited results today (30 October), reporting a solid 289.2% y/y growth in PAT to NGN1.60 billion (Q3-22: NGN1.21 billion), translating to an EPS print of NGN4.95 (Q3-22: NGN1.27) owing to the strong revenue growth (+112.8% y/y) in the period. As a result, the 9M-23 EPS settled higher at NGN21.93 (Q3-22: NGN18.92).
OKOMUOIL’s revenue grew significantly by 112.2% y/y in Q3-23 (9M-23: +20.9% y/y), driven by solid growth in local sales (+103.6% y/y). We attribute the growth in local sales to higher local Crude Palm Oil (CPO) pricing following the currency depreciation. Meanwhile, export sales also grew markedly by 189.0% y/y. On a quarter-on-quarter basis, revenue increased by 22.3% (Q3-22: -53.5% q/q).
Gross margin increased by 10.94ppts to 60.8% in Q3-23 (Q3-22: 49.9%), facilitated by accelerated revenue growth amid a rise (+18.2% y/y) in cost of sales. Accordingly, EBITDA (+79.72ppts) and EBIT (+20.90ppts) margins rose to 115.7% and 35.4%, respectively, despite higher operating expenses (+52.8% y/y).
Net finance costs rose significantly by 337.7% y/y to NGN777.72 million, following a 389.2% y/y increase in finance costs. The sharp growth in finance cost was driven by a substantial FX loss (NGN610.49 million | Q3-22: Nil) and an increase in interest on long-term loans (+54.3% y/y to NGN247.47 million).
Overall, the company recorded a 431.7% y/y growth in pre-tax profit to NGN6.32 billion in Q3-23 (Q3-22: NGN1.19 billion), following a tax expense of NGN1.60 billion, profit after tax grew by 289.2% y/y to NGN4.72 billion (Q3-22: NGN1.21 billion).
Comment: OKOMUOIL’s Q3-23 performance was impressive as profitability improved following the effect of naira depreciation on CPO prices. We still expect impressive topline growth to continue to shore up the company’s earnings for the remainder of the year, as we believe the aforementioned upside favouring Nigerian CPO planters will remain intact in the near term. Our estimates are under review.
