Okomu Oil Palm Plc missed its pre-tax profit projection for Q2 2024 of N6.699 billion and reported a pre-tax profit of N6.24 billion for the quarter that ended on June 30, 2024.
This is a 22.28% year-over-year (YoY) reduction.
Okomu Oil Palm Plc’s Q2 2024 financial accounts show that the firm brought in N31.525 billion in revenue, a 25.7% decrease from Q1 2024.
But if we compare the first half (H1) of 2024 to 2023, we see a lot of improvement and hope. The overall revenue for 2023 is about equivalent to the H1 2024 revenue of N75.008 billion.
Nearly 90% of its overall revenue comes from local sales, which continue to be the company’s primary revenue source. This suggests a robust existence and high level of demand in the nearby market.
Important differences (Q2 2024 versus Q2 2023)
● Revenue: N31.525 billion, up 92.33% YoY
● Cost of sales: N20.152 billion, up 200.51% YoY
● Gross profit: N11.373 billion, up 17.43% YoY
● Net operating expenses: N5.708 billion, up 12.01% YoY
● Profit from continuing operations before tax and fair value changes: N5.665 billion, up 23.45% YoY
● Exchange gain: N3.502 billion
● Exchange loss: N2.702 billion
● Profit after tax: N5.115 billion, down 15.06% YoY
● Earnings per share: N5.36, down 15.06% YoY
What to Note
In general, the business underperformed in Q2 2024 compared to Q1 2024 in all major performance metrics:
● Comparing Q2 2024 to Q1 2024, revenue, profits, margins, and earnings per share decreased. This indicates that, in comparison to the first quarter, the company’s second quarter financial performance was weaker, with lower sales, lower profitability, narrower profit margins, and lower returns for shareholders.
● Its robust revenue and profit margins, however, continue to provide solace and hope. Comfort and optimism are provided by the company’s ability to keep 36% of revenue as gross profit and 16.2% as net profit, despite its high cost of sales.
● This shows that even with large increases in manufacturing and sales expenses, the business was still able to keep a sizable amount of its income as gross profit after deducting these costs.
● Despite a notable rise in the cost of sales, a robust gross profit margin of 36% is positive news for investors. It implies that Okomu Oil Palm Plc has the ability to command a high price, strong market demand, or well-executed cost control measures.
Not to be overlooked is the foreign exchange movement. The company appears to have suffered changes in foreign exchange rates during the period under review, as evidenced by its recording of both an exchange loss of N2.702 billion and an exchange gain of N3.502 billion in comparison to the preceding period.
● A company’s financial statements can be greatly impacted by abrupt changes in exchange gains or losses, particularly if they deviate from historical patterns. This can have an effect on reported profits, shareholder equity, and investor sentiment. As a result, management needs to discuss these swings and provide an update on the company’s outlook during earnings calls.
A prominent player in the agricultural and crop production industry, Okomu Oil Palm Plc is renowned for its ability to consistently provide returns to shareholders in the form of dividends and share price growth.
Okomu has continuously distributed dividends for the previous five years. It paid out N18.50 in dividends per share the previous year, for a dividend yield of 6.34% at now.
From a profit after taxes of N16.199 billion, the firm distributed an interim dividend of N4.50 per share in the first half of 2023. Its post-tax profit of N20.196 billion for the first half of 2024 suggests a high likelihood of paying an interim dividend for the first half of 2024.
As of Friday, July 26, 2024, at the close of trade, the share price has recovered from its Q1 2024 YtD fall of 24.85%, attaining a YtD gain of 12.31%.
