Afrigather …Okomu & Presco: A story of two palm oil giants
Okomu Oil Plc and Presco Plc, two of the biggest agro-based corporations on the Nigerian Change Group, have recorded after-tax revenue development and income development in a interval characterised by a difficult enterprise surroundings.
The 2 palm oil giants had been capable of climate the storm of inflation and Naira depreciation as Presco Plc recorded 158 % development in after-tax revenue within the first half (H1) of 2024. Okomu Oil Plc, then again, reported 24.7 % development in after-tax revenue in H1.
Okomu Oil recorded the quickest development of 84.7 % in complete gross sales(income) throughout the interval.
Presco Plc reported 83.1 % development, indicating that whereas many producers struggled with losses, these two agro-based giants reported development of their backside strains.
Whereas the Nigerian palm oil trade is experiencing a increase resulting from elevated funding, demand and market exercise, Henry Olatunoye, former nationwide president of the Nationwide Palm Produce Affiliation of Nigeria (NPPAN), highlighted a regarding pattern.
He advised BusinessDay that the Naira devaluation has considerably impacted the price of important items within the nation. “This devaluation has additionally made investments denominated in Naira much less engaging in comparison with these in stronger currencies just like the greenback.”
The palm oil producers raked in a complete of N163.02 billion in gross sales for the primary six months of 2024, from N88.67 billion in the same interval of 2023.
Additional checks by BusinessDay revealed that Okomu Oil’s turnover grew to N75 billion from N40.6 billion, with income from gross sales within the native market (Nigeria) amounting to N67.3 billion whereas export gross sales stood at N7.74 billion.
Okomu Oil’s gross sales in Nigeria elevated to N67.3 billion from N38.1 billion whereas its income from export gross sales jumped to N7.74 billion from N2.53 billion.
For Presco Plc, income was primarily obtained from native gross sales, with a development to N88.02 billion from N48.07 billion.
Nigeria’s palm oil trade, which was a income spinner for the nation within the 60s earlier than the invention of crude oil in business portions, continues to be in its embryonic stage and it’s in dire want of funding and transformation insurance policies.
The Nationwide Bureau of Statistics(NBS) Overseas Commerce in Items Statistics report reveals that palm oil is Nigeria’s twelfth most imported product.
Nigeria was within the 1960’s the world’s largest palm oil producer with a world market share of about 43 % to 60 %, nevertheless it presently produces as dismally low as 3.5 % globally.
In keeping with america Division of Agriculture (USDA), Nigeria is the fifth largest producer of crude palm oil (CPO) with lower than 2 % of complete international market manufacturing of 74.08 million MT.
“Common crude palm oil (CPO) costs in Nigeria traded at an 89.24 % premium, from 76.54 in 2023 to international costs within the 9 months of 2024, primarily because of the affect of persistent Naira weak spot within the parallel market,” CardinalStone said in a notice.
Each Okomu Oil Palm and Presco are built-in agricultural corporations with oil palm plantations, palm oil mills, crushing vegetation, and oil refining vegetation. They interact within the cultivation of oil palm and the extraction and refining of palm oil into completed merchandise. They’re main suppliers of specialty fat and oils to a number of giant and medium corporations.
Okomu Oil Palm, the older and the bigger of the 2 corporations, was integrated in 1979 and listed its shares on the Nigerian Inventory Change (NSE) in 1991, the identical 12 months Presco was integrated.
Okomu Oil Plc share worth traded at N417.7 with 6,408 volumes traded and 953.9 million shares excellent as at 11:06 am on September 20, 2024.
Presco Oil’s share worth traded at N485.4 on September 20. About 59,436 volumes had been traded on that day with 1 billion shares excellent as at 11:06 am.
Palm oil is wealthy in Vitamin A for good eyesight. It additionally fights most cancers, mind illness, getting old, malaria, excessive blood ldl cholesterol and hypertension. Moreover, it’s efficient towards cyanide poisoning, assists in weight reduction in addition to growing physique metabolism.
Nigeria is the biggest client of palm oil on the African continent however in contrast with the low stage of manufacturing it has a deficit of 1.6mmt. Palm oil producers have needed to take care of insecurity and poor transportation, together with excessive fertilizer costs, in 2024.
Okomu Oil’s value of manufacturing for the primary half of 2024 surged to N30.5 billion, from N11.1 billion in the identical interval of 2023. The agency invested N26.4 billion in oil palm and N1.69 billion in rubber throughout the interval.
Presco’s value of manufacturing elevated to N22.4 billion from N16.2 billion. The agency invested N12.06 billion within the maintenance of mature plantings, harvesting and labor; mill processing, refinery and packaging value(N7.1 billion); depreciation of property, plant, and tools (N2.23 billion); restore and upkeep (N1 billion); and uncooked supplies consumed (N29.5 million).
Presco’s earnings per share rose to N38.9 per share from N15.08 per share. Okomu Oil’s earnings per share elevated to N21.17 per share from N16.98 per share.
Okomu Oil’s finance value elevated to N7.44 billion within the first half of 2024 from N1.21 billion in the identical interval of 2023 whereas Presco’s finance value rose to N4.42 billion from N4.06 billion.
Nigeria imports palm oil value $600m yearly
The Nationwide Palm Produce Affiliation of Nigeria (NPPAN) has mentioned Nigeria spends $600 million on palm oil importation yearly.
Alphonsus Inyang, nationwide president of the affiliation, mentioned this in an interview with the Information Company of Nigeria, the place he described the expenditure as unhealthy for nationwide improvement.
He mentioned the cash may very well be saved and injected into the financial system if the palm oil sub-sector was given due consideration by successive governments.
“Nigeria which was self-sufficient in palm oil manufacturing previously, now spends an enormous quantity to import the identical product,” Inyang said whereas including that the reverse was the case in the intervening time as over 50 % of what we devour is imported.
“In the meanwhile, the nation occupies the fifth place within the league of palm oil-producing international locations after Indonesia, Malaysia, Thailand and Colombia. Nigeria could even lose the place to smaller international locations which might be investing closely within the sector.
“Indonesia occupies the primary place, producing 50 million metric tons, Malaysia second with 19 million metric tons, Thailand 3.28 million and Colombia 1.9 million metric tonnes,” he mentioned.
Inyang known as on the Federal Ministry of Agriculture and Meals Safety to help NPPAN members with seedlings to develop 250,000 hectares per 12 months.
“Our members can plant as much as 250,000 hectares per 12 months via the affiliation’s Nationwide Oil Palm Technique Improvement Plan; all we wish are inputs. The federal government doesn’t want to offer and develop land for us, we want seedlings, fertilizers, logistics, and implements to shut this hole inside 4 years,” he mentioned.
There’s a proposal named ‘Nationwide Oil Palm Technique Improvement Plan.’ It’s focused at revitalising the palm oil trade.
This plan goals to develop 250,000 hectares of oil plantation yearly which can shut the hole between the demand and provide of palm oil domestically inside the subsequent 4 years.
