Nigeria’s palm oil producers posted their highest profit in six years in the first half of 2021, driven by a combination of increased demand, government policies and price increases.
Presco Plc and Okomu Oil Palm Plc, the largest players in the oil palm sector in Nigeria, recorded combined sales growth of 67 percent year-on-year in the first half of 2021, reaching N45.09 billion from N26.98 billion in 2020. both companies also rose a combined 134 percent from N8.4 billion to N19.7 billion.
Palm oil producers in Africa’s largest economy are enjoying increased revenue as a result of government policies, most notably the ban on access to forex for palm oil imports into the country and the impact of the border closure that encouraged patronage of locally made products.
At the same time, red cooking oil prices have been on the rise since the beginning of the year as the nation has witnessed rapid food price inflation. As Nigeria’s poverty index grew, people began to spend more of their income on necessities and reduced their appetite for luxury. For instance, champagne consumption in the country fell to its lowest point in seven years as the average Nigerian now spends 101 percent of their income eat.
Nigeria is the largest consumer of palm oil in Africa, with demand fueled primarily by household consumption as 90 percent of palm oil consumption comes from the food industry, while the non-food industry accounts for 10 percent.
Okomu Plc had a 75 percent increase in sales to N23.6 billion from N13.5 billion in the previous year. Local sales of its products contributed the most to sales at N23.62 billion, while other revenues accounted for a marginal N677 million.
Similarly, gross profit grew 74 percent to N21.6 billion in the reporting period from N12.4 billion in 2020. Pre-tax profit improved by 126 percent, moving from N5.5 billion to N12.4 billion in the same period of 2020.
Okomu’s profits increased 138 percent to N9.5 billion from the N4 billion achieved in the corresponding period of 2020.
presco It also experienced tremendous growth in its financial performance, achieving a 131 percent increase in profits for the period from N4.39 billion in 2020 to N10.12 billion in 2021, despite a 104 percent increase in tax payment in 2021 worth N2. 8 billion, compared to the N1.3 billion paid in the same period of 2020.
Both turnover and gross profit grew. In the first half of 2021, Presco’s revenue grew 59 percent to N21.4 billion, from N13.4 billion in the corresponding period of 2020.
Gross profit in 2020 was N9 billion, but it rose to N16.5 billion in the reporting period, representing an increase of 83 percent. Pre-tax profits rose 124 percent to N12.9 billion in 2021, from N5.7 billion in 2020.
Nigeria is the fifth largest producer of palm oil in the world, producing less than two percent of global demand at 1,280 tons, according to Index Mundi.