Okomu Oil: Domestic Sales drive solid earnings growth in Q2
Okomu Oil Palm Company Plc. has announced a 30.0% year on year growth in earnings to ₦2.0 billion in its Q2’20 unaudited results.
Analysts said the company’s strong start to the year may have been aided by the impact of sustained land border closures amid the ongoing pandemic.
Some positive vibes in the results include a 50.6% year on year jump in turnover to ₦6.5 billion in the quarter, following a 67.9% increase in local sales.
Chapel Hill Denham equity research analysts stated that this offset weakness in export revenue which dropped off by 35.3%.
Also, the investment firm believes that growth in domestic revenue likely reflected the impact of greater harvesting from current and previous year planted areas.
Elsewhere, the weaker export sales may have tracked lower global demand for rubber, analysts stated.
The palm oil company’s gross profit margin advanced by 6.9 percentage points to 87.3% in Q2’20.
As at half-year, gross profit margin stood at 92.0%, up 11.8 percentage points and largely reflected cost improvements in Q1’20.
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In its remark, Chapel Hill Denham stated that the cost improvement cuts across both oil palm and rubber segments.
Supporting the scorecard, cash generated from operations soared to ₦5.4 billion in H2’20 from ₦662 million in the corresponding period of 2019.
This was aided by 84.6% surge in cash receipts from customers. Meanwhile, Chapel Hill Denham expressed concern with OKOMUOIL’s operating cost which rose by about 63.6% to ₦3.1 billion.
Operating expenses to sales ratio rose by 3.8 percentage points to 47.7%.
“We, however, note the moderation in operating expenses compares to ₦3.5 billion in Q1’20”, analysts stated.In the period, the company’s effective tax rate was also 17.5 percentage points higher at 20.1% in the quarter, but lower than 33.0% in Q1’20.
Okomu Oil finance cost rose by 416.3% due to new long term borrowing obtained last year for business expansion and exchange rate loss, analysts said to a lesser extent.
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Okomu Oil: Domestic Sales drive solid earnings growth in Q2
