The Okomu Oil Palm Plc: Notes from recent discussion with management
- Top-line Performance: Management attributed the robust turnover to higher commodity prices (CPO: +55% YoY and Rubber: +22% YoY) which was partly induced by naira depreciation. With regards to volume, Okomu produced 36,260 tonnes of CPO (unchanged from prior year) while rubber sales contracted 9% to 7,140 tonnes. The decline in rubber volume reflected impact of wind damage and fire outbreak on some portion of the rubber plantation..
- Input Costs: Management attributed the decline in COGS to import substitution which afforded the company with cheaper substitutes. According to management, the proportion of imported raw materials to input cost have now been reduced to circa 10% as at the end of 2016. Furthermore, wages which constitute 65% of overall cost have been largely contained.
- FX loss: Okomu’s Managing Director attributed the higher FX loss to increased dependence on parallel market for its FX needs, which includes the partial repayment of its foreign debt and financing its imported raw materials.
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