
January 31, 2025/CSL Research
Okomu Oil Palm Plc (OKOMUOIL) in its unaudited FY 2024 results reported an impressive 73.4% y/y increase in Revenue, reaching N130.06 billion, up from N74.98 billion in FY 2023, marginally missing our FY2024 estimate of N135.01 billion by 3.8%. However, Revenue was down moderately by 9.8% q/q, dropping to N26.11 billion in Q4 2024 from N28.94 billion in Q3, as Q4 is particularly an off-peak season. The substantial y/y Revenue growth seen, was primarily driven by robust local demand for crude palm oil (CPO) across both industrial and household segments (N107.54bn, +60.4%y/y). Also export sales of its rubber product grew significantly, up +183.3%y/y to N22.52bn. This demand was supported by Okomu’s B2B and B2C sales models and was further boosted by price adjustments on the back of the Naira’s depreciation in the year. Average domestic prices of CPO peaked at N1.5 million/Metric ton (vs N1.1 million in 2023). Local sales contributed 82.7% (vs 84.7% in 2023) to total Revenue, while export sales contributed 17.3% (vs 15.3% in 2023).
Okomu Oil’s Cost of Sales grew in tandem with Revenue growth, up 75.6% y/y to N48.64 billion from N27.6 billion in 2023. However, on a quarterly basis, the Cost of Sales declined by 30.4% in Q4 2024 to N9.86 billion from N14.16 billion in Q3 2024. As a result, the company’s Gross Profit Margin stabilised at 62.7% and its Gross Profit rose 72.2%y/y to N81.57 billion from N47.38 billion for FY 2023.
The current high-cost business environment impacted Okomu Oil Palm Plc’s Operating Expenses (OPEX), which rose by 78% y/y, reaching N30.78 billion, up from N17.3 billion (FY 2023). Q/q, the business OPEX spiked by 61.8% to N6.6 billion in Q4 2024 compared to N4.1billion in Q3 2024, causing EBITDA to decline by 9.8% in the quarter to N9.65 billion. Year on year, EBITDA improved by 47.4% reaching N50.79 billion.
The business reported Finance Income of N11.32 billion in FY 2024, up from N768m in FY 2023 while Finance Cost stood at N10.07 billion, bringing Net Finance Income to N1.26 billion. Okomu recorded FX gain of N11.33bn and FX loss of N8.76bn in FY 2024 bringing the Net FX gain to N2.58 billion compared to a Net FX loss of N632.5m in FY 2023.
Okomu Oil Palm Plc reported Pre-tax Profit of N52.05 billion in FY 2024, marking a 58.4% y/y rise from N32.86 billion in FY 2023. Profit After Tax also rose by 61.9% y/y to N34.27 billion. In Q4 2024, the company posted a Pre-tax Profit of N11.36 billion, a marginal decline from N11.41 billion in Q3 2024. Profit After Tax declined by 66.2%, reaching N5.44 billion in Q4 2024, down from N8.14 billion in the previous quarter.
We maintain a BUY recommendation with a target price of N548.8/s. Current price is N444/s.
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