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THE OKOMU OIL PALM COMPANY PLC Q1'22 Earnings Release - Higher CPO prices spur topline growth
| Higher cost of sales constrains gross margin Amid the supply crunch of edible oils, driven by the ongoing Russia-Ukraine crisis, global CPO prices advanced by 32% from an average of $1,344/mt to $1776/mt. The price increase during the period was fueled by increased demand for CPO, due to shortages of cheaper rival edible oils. Consequently, revenue jumped by 63% y/y to ₦20.4 billion, anchored on the rise in domestic and global CPO prices. |
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| Despite the higher prices, cost of sales rose 6x y/y to ₦2.8 billion, dragged by persistent inflationary pressures. The ongoing Russian-Ukraine crisis further impacted the price of AGO and fertilizers, causing an uptick in their input costs. Accordingly, gross margin declined by 10ppts amidst a 46% y/y increase in Gross profit to ₦17.5 billion. | |||||
| Border reopening may slowdown price increase Looking ahead, we expect global CPO prices to remain elevated, on the back of the export ban by the Indonesian government, coupled with the supply disruption of other edible oils. Accordingly, we expect this to trigger a price increase in domestic CPO prices and consequently benefit domestic players. |
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