Okomu Oil Palm Plc has continued its sales winning streak as government policies gave the company edge over competitors who are grappling with a currency woe. The ban on importers of certain items in accessing the foreign exchange was an advantage to oil palm producers as the demand for local goods spiked.
Profit at Okomu, a Benin City-based manufacturer of the edible oil, increased by 51.39 per cent in the nine-months to September as sales jumped 53.14 per cent to N6.39 billion, according to results published in October. The oil palm producer’s shares have gained 61.81 per cent since the start of the year while market capitalization stood at N62.0 billion as of November 5.
“In the aftermath of CBN policy pronouncement regarding CPO imports, domestic prices surged 144% over 2016 to N661.4/kg importers who account for 29% of local supply cutback on imports,” said analysts at ARM Research in a recent report.
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“CPO price was in an upward trajectory as it spiked to N650 per kilogram in December 2016 from N273 as at December 2015,” according to the ARM Research report. Nigeria, Africa’s most populous nation was once the largest exporter of CPO in the ’60s but the discoveries of black gold in the early seventies resulted in the neglect of the palm sector.
According to a recent report by USAD, Indonesia’s total production for 2016 was 35 million metric tonnes, Malaysia; 19.50 million metric tonnes, others; 4.94 million, Thailand; 2.30 million metric tonnes, Columbia; 1.14 million metric tonnes, and Nigeria, 970,000.
“We continue to believe that local palm oil producers are in an advantageous position relative to importers (competitors) due to CBN policies which have encouraged local production and also translated to favourable pricing,” said analysts at FBNQuest Limited.
While the company’s sales and profit have continued to spike amid a volatile and unpredictable macroeconomic environment, margins dipped in the period under review. Gross margins fell to 85.04 per cent in the period under review from 88.44 per cent as at September 2016.“The subsisting FX ban on imported CPO at the interbank market leaves importers subjected to the vagaries at the parallel market,” according to analysts at ARM Research.
BALA AUGIE
