Okomu oil delivers blockbuster performance in 1Q22

Image Credit: Okomu Oil

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May 5, 2022/FSDH Research

Key Performance Highlights:

  • Okomu Oil published its unaudited 1Q22 numbers, with a solid YoY operating performance. Revenue grew 63.2% YoY to N20.5 billion in 1Q22. The revenue growth was primarily driven by a 66.6% YoY jump in the local sales (92.1% of 1Q22 sales), further boosted by a 31.8% YoY spurt in exports (7.9% of 1Q22 sales). Revenue performance compared to 4Q21 was stellar, with a 219.5% growth QoQ.
  • Cost of Sales jumped 504.1% YoY to N2.9 billion in 1Q22, leading to a 1031 bps YoY contraction in Gross Margin to 85.9% in 1Q22. The cost of sales rose sharply due to a whopping 1796.9% YoY increase in rubber cost (30.6% of the 1Q22 cost of sales), while palm oil cost (69.4% of the 1Q22 cost of sales) soared 364.7% YoY to N2.0 billion in 1Q22. The company faced elevated cost pressures in 1Q22 due to rising inflationary pressures. The net operating expenses slipped 23.4% YoY to N3.9 billion in 1Q22. Consequently, the operating profit grew 95.9% YoY from N7.0 billion to N13.7 billion in 1Q22.
  • The company recorded a finance cost of N135 million in 1Q22 compared to N24 million in 1Q21, primarily due to rising interest on long-term loans. The finance income stood at N4 million in 1Q22, resulting in a net finance cost of N131 million in 1Q22 compared to N22 million in 1Q21. Okomu oil paid an effective tax rate of 30.0% in 1Q22 versus 24.4% in 1Q21.
  • The company reported a net profit of N9.5 billion in 1Q22 against N5.3 billion in 1Q21. Okomu reported earnings per share of N9.96 compared to N5.53 in 1Q21. The company’s EBITDA and operating margins expanded by 1006 ppts and 1118 bps YoY, respectively, in 1Q22. The net profit margin also improved by 438 bps to 46.4% in 1Q22.
  • On 4th February, Okomu Oil confirmed the attack on the company by unknown gunmen as widely published in various newspapers. The company reported that the incident occurred on 1st February 2022, in which several unknown gunmen armed with AK-47 rifles came onto the company’s plantation located at Okomu-Udo, Ovia South-West Local Government Area, Edo State, killing one of its workers and setting ablaze three excavators and 90 hectares of the rubber plantation. Okomu Oil further reassured that the company is working normally and disruptions are minimal with the police and other security agencies liaising with the management to secure the company and its workers to forestall any further attacks. 

Market Reaction: Investor reaction to the strong 1Q22 results was overwhelmingly positive as the stock popped 10.0% (4/5) versus a 0.98% gain for the All-Share Index (4/5).

Okomu Oil Earnings Highlight 1Q22

Source: Company Financials, FSDH

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