October 30, 2024/CSL Research
Okomu Oil Palm Plc (OKOMUOIL) reported a remarkable 71.8% y/y increase in Revenue for the first nine months of 2024 (9M 2024), reaching N103.95 billion, up from N60.65 billion in 9M 2023. However, Revenue was down moderately by 8.2% q/q, dropping to N28.94 billion in Q3 2024 from N31.53 billion in Q2. The substantial y/y Revenue growth in 9M 2024, which has already exceeded the N75.11 billion recorded for the entire 2023 fiscal year, was primarily driven by robust local demand for crude palm oil (CPO) across both industrial and household segments. This demand was supported by Okomu’s B2B and B2C sales models and further boosted by price adjustments in response to the Naira’s depreciation. Local sales contributed 84.7% of the total Revenue, while export sales made up the remaining 15.3%. Additionally, the global price of CPO rose by 10.7% to US$921.25 per tonne in Q3 2024, adding further support to Okomu Oil’s Revenue growth.
Okomu Oil Palm Plc reported a 135.5% y/y increase in Cost of Sales for the first nine months of 2024, rising to N44.64 billion from N18.96 billion in the same period of 2023. However, on a quarterly basis, the Cost of Sales declined by 29.5% in Q3 2024 to N14.2 billion, down from N20.15 billion in Q2 2024. This reduction is attributed to the seasonal shift from intensive preparations for the dry season in Q2 to regular plantation activities in Q3. As a result, the company’s Gross Profit Margin improved markedly, reaching 51.1% in Q3 2024 compared to 36.1% in Q2 2024. This boost in margin contributed to a 30% increase in Gross Profit, which rose to N14.78 billion in Q3 2024 from N11.37 billion in Q2 2024, reflecting Okomu’s enhanced profitability for the quarter
The current high-cost business environment impacted Okomu Oil Palm Plc’s Operating Expenses (OPEX), which increased by 21.9% y/y, reaching N18.12 billion in the first nine months of 2024, up from N14.87 billion in 9M 2023. On a quarterly basis, however, the company successfully managed its costs, with OPEX declining by 28.5% to N4.08 billion in Q3 2024 from N5.71 billion in Q2 2024. Consequently, EBITDA grew significantly by 88.9%, reaching N10.7 billion in Q3 2024, up from N5.67 billion in Q2 2024 resulting in an improved EBITDA margin, which rose by 19 percentage points to 37% in Q3 2024.
The company’s Finance Income grew marginally by 10% y/y to N4.1m from N3.7m (9M 2023) while Finance Cost stood at N698.2m, bringing Net Finance Cost to N694.1m. Okomu recorded FX gain of N8.23bn and FX loss of N8.05bn in 9M, bringing the Net FX gain to N184.3m compared to a Net FX loss of N1.2bn in 9M 2023. Q/q, the business recorded N946.5m Net FX gain, 18.3% rise from Q2 2024.
Okomu Oil Palm Plc reported a Pre-tax Profit of N40.68 billion for the first nine months of 2024, marking a 39.2% y/y increase from N29.22 billion in 9M 2023. Profit After Tax also rose by 35.5% y/y to N28.34 billion. In Q3 2024, the company posted a Pre-tax Profit of N11.4 billion, an 83% increase from N6.23 billion in Q2 2024. Profit After Tax similarly grew by 59.2%, reaching N8.14 billion in Q3 2024, up from N5.12 billion in the previous quarter.
We have a Hold recommendation on the stock. Price target of N307.22/s. Current price is N338.1/s
Kindly click on the below link to download the full report.
CSL Okomu Plc – 9M 2024 Quick take.pdf
