The OKOMU Oil Palm Company Plc (OKOMUOIL) published its Q4-22 unaudited financials on Monday, January 30, reporting a loss per share of NGN0.75 in Q4-22 (Q4-21: NGN0.07). For 2022FY, the results show a 50.2% y/y growth in EPS to NGN18.17 (2021FY: NGN12.10).
Revenue grew by 42.8% y/y in Q4-22 (2022FY: +58.4% y/y), primarily driven by sustained growth in the local (+50.1% y/y | 82.3% of revenue) and export (+16.6% y/y | 17.7% of revenue) sales lines. However, on a quarter-on-quarter basis, revenue declined by 3.8% due to a decline in local sales (-11.3% q/q).
Gross margin turned positive as it came in at 40.6% for the quarter (Q4-21: 33.9%), as cost of sales margin reduced to 59.4% (Q4-21: 133.9%). We highlight that the cost pressures in the period emanated from higher (1) diesel prices and (2) fertilizer costs. Accordingly, operating profit settled lower at NGN97.03 million (Q4-21: NGN1.31 billion), amid a 208.9% y/y fall in operating expenses.
Net finance cost rose to NGN1.85 billion (Q4-21: NGN117.47 million), following a substantial increase in finance costs (NGN1.73 billion vs NGN68.56 million in Q4-21). We highlight that the sharp increase in finance cost was mainly due to higher interest on long-term loans (NGN1.02 billion vs NGN33.82 million in Q4-21).
Overall, the loss before tax came in at NGN1.70 billion (Q4-21: NGN1.30 billion). Following a tax credit of NGN988.46 million, a loss after tax of NGN713.67 million (Q4-21: NGN64.56 million) was recorded.
Reacting to the result, analysts at Cordros Capital averred that “OKOMUOIL’s Q4-22 performance was underwhelming, in our view, considering the weak earnings reported, despite the stellar growth in top line. For 2023FY, we believe the upgrade of the milling capacity in the Okomu II extension will drive efficiency gains in production and support volume growth, and in turn, revenue expansion amid a possible dip in CPO prices. Nonetheless, we believe cost pressures will remain a sticking point for the CPO planter. Our estimates are under review.
