Nigeria's palm oil producers raked in their highest profits in six years in the first half of 2021 due to a combination of increased demand, government policies and price hikes.
Presco Plc and Okomu Oil Palm Plc, the biggest players in Nigeria's oil palm space, recorded a collective increase in revenue of 67 percent year-on-year in the first half of 2021, reaching N45.09 billion from N26.98 billion in 2020. The profit after tax of both firms also surged by a combined 134 percent to N19.7 billion from N8.4 billion.
Palm oil producers in Africa's largest economy are enjoying increased sales due to government policies, especially the ban placed on accessing forex for palm oil importation into the country and the impact of the border closure exercise which encouraged patronage of locally made products.
At the same time, prices of the red cooking oil have been on the increase since the beginning of the year, as the nation has witnessed rapid inflation in food prices. As Nigeria's poverty index grew, people began to spend more of their earnings on necessities and reduce their appetite for luxury. For example, champagne consumption in the country dropped to a seven-year low as the average Nigerian now spends 101 percent of their earnings on food.
Nigeria is the largest consumer of palm oil in Africa, with demand mostly fuelled 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 revenue surge of 75 percent to N23.6 billion from N13.5 billion in the previous year. Local sale of its products contributed the most to its revenue with N23.62 billion while its other income accounted for a marginal N677 million.
Similarly, its gross profit grew by 74 percent to N21.6 billion in the period under review from N12.4 billion in 2020, Its profit before tax improved by 126 percent moving to N12.4 billion from N5.5 billion in the same period of 2020.
Okomu’s profit jumped 138 percent to N9.5 billion from the N4 billion achieved in the corresponding period of 2020.
Presco as well experienced stellar growth in its financial performance achieving a 131 percent increase in its profit for the period moving from N4.39 billion in 2020 to N10.12 billion in 2021, despite a 104 percent increase in its tax payment in 2021 worth N2.8 billion, as against the N1.3 billion paid in the same period of 2020.
Its revenue and gross profit as well experienced growth. In the first half of 2021, Presco’s revenue grew by 59 percent to N21.4 billion from N13.4 billion in the corresponding period of 2020.
Its gross profit in 2020 was N9 billion, however, it jumped to N16.5 billion in the period under review representing an 83 percent increase. Its profit before tax surged by 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 1280 metric tonnes, according to Index Mundi.