April 2, 2024/CSL Research

Okomu Oil Palm Plc (OKOMUOIL) in its full year 2023 audited results reported an impressive 26.6% y/y growth in Revenue to N75.11bn from N59.32bn (FY 2022). On a q/q basis, Revenue declined, down 27.9% in Q4 to N14.46bn from N20.05bn recorded in Q3 2023. Though we observed a decline in CPO price in Q4 2023, we believe demand may have also been low. In FY 2023, the business grew its revenue from palm oil-produce by 24.7% to N67bn, rubber sales by 44.7% to N7.95bn, and palm oil processing by 54% to N120.4bn.

The adjusted Cost of Sales experienced a marginal 6.5% year-on-year increase to N12.52 billion in FY 2023 from N11.8 billion in FY 2022. This slight growth in the Cost of Sales, factoring in depreciation, was anticipated due to the local sourcing of rubber lumps and Fresh Fruit Bunches, which shielded costs from currency devaluation. Moreover, effective management of consumables expenses, upkeep, and harvesting & collection expenses contributed to this controlled increase. Consequently, this led to a notable 31.6% surge in Gross profit, reaching N62.6 billion.

Operating Expenses surged by 31.6% year-on-year to N27 billion in FY 2023, compared to N20.5 billion in FY 2022. This increase was driven by elevated running costs amidst the prevailing high inflationary business environment. However, despite this rise, EBITDA demonstrated robust growth, climbing by 48.3% year-on-year to N41.65 billion from N28.1 billion.

The company’s Finance Income increased marginally by 5.1% to N5.2m from N4.97m, on the back of an increase in interest earned on deposits with banks. On the other hand, Finance Cost shot up by 243% to N3.67bn from N1.1bn (FY 2022), with interest on lease liabilities (N1.87bn) and interest on loans & borrowings (N1.79bn) making up the total cost respectively. Overall, Net Finance Cost came to N3.6bn, up 244% from N1.1bn in 2022.

The business reported a robust N4.78bn in FX gains overshadowing the FX loss of N1.7bn in the period resulting in Net FX gain of N3.03bn in 2023 compared with N22m in FX loss in 2022.

Okomu reported N33.8bn in FY 2023 Profit Before Tax, up 43.9% compared with N23.5bn (FY 2022), and Profit After Tax of N20.6bn compared with N16.23bn PAT in the corresponding period of 2022.

We retain a Buy recommendation on Okomu with a price target of N272/s. Current price is N243/s.

Kindly click on the below link to download the full report.

​​​​​​​​​Okomu Oil AFY 2023 Quick Take.pdf​