Nigerian Palm Oil Producers See Significant Revenue Growth Amid Economic Challenges

In 2023, Nigeria’s top palm oil producers experienced substantial revenue growth, with combined earnings soaring to N80.027 billion from N46.122 billion. This marked a significant boost, reflecting the resilience and expanding market presence of key players such as Okomu Oil and Presco Plc, despite macro-economic headwinds.

Detailed Financial Performance

Okomu Oil

Okomu Oil registered a total revenue of N43.482 billion, split between N39.299 billion from local sales and N4.183 billion from exports. This represented a 115.91% increase in sales revenue compared to N24.207 billion in Q1 2023. The company’s profit after tax grew by 48.18%, reaching N15.080 billion from N10.177 billion in the previous year. However, the cost of sales also surged by 135.12% to N10.324 billion from N4.391 billion, consuming 23.74% of total revenue. Okomu’s shares closed at N265.00, a 3.6% gain from its prior closing price of N255.70.

Presco Plc

Presco Plc reported a 94.13% increase in revenue, reaching N42.545 billion in 2024 from N21.915 billion in 2023. Unlike Okomu, Presco’s revenue was entirely from local sales. The company’s profit after tax skyrocketed by 141.47% to N24.055 billion from N9.962 billion. The cost of sales rose by 53.54% to N8.747 billion, representing 20.56% of total revenue. Presco’s shares closed at N359.00, up 4.1% from N345.00.

Economic Context and Inflationary Pressures

The impressive revenue figures come against a backdrop of severe economic challenges, particularly the depreciation of the Naira and rampant inflation. Nigeria’s food inflation rate reached 40.66% year-on-year in May 2024, up from 24.82% in May 2023. This increase is driven by rising prices in various food categories, including staples such as semovita, yam flour, and palm oil.

Despite these pressures, the month-on-month food inflation rate in May 2024 slightly decreased to 2.28% from 2.50% in April 2024, suggesting some stabilization in the immediate pricing environment.

Industry Dynamics

The Nigerian palm oil industry is predominantly composed of smallholders, with about 95% of total domestic production coming from these and semi-mechanized processors. Major players like Presco Oil Plc and Okomu Oil Plc stand out as large-scale operators within this landscape.

Challenges and Prospects

Nigeria’s heavy reliance on oil and gas as primary revenue sources has historically hindered the palm oil sector’s growth. Addressing the challenges faced by the industry’s key drivers—farmers, processors, marketers, and equipment fabricators—is essential for boosting production and improving product quality.

For Nigeria to enhance its domestic production and reduce palm oil imports, strategic investments and supportive policies are needed to empower smallholders and modernize processing techniques. This would not only stabilize the local market but also position Nigeria to better meet the rising global demand for palm oil.

Previous post Dangote Refinery to Send First Shipment of Low-Sulfur Fuel Oil to Singapore
Next post Rising LPG Prices: Impact and Implications for Nigerian Households

Leave a Reply

Your email address will not be published. Required fields are marked *