Okomu Oil to invest N8bn for business expansion
Okomu oil palm company Plc plans to invest about N8 billion over the next four years for business expansion as its shareholders last week, voted close to N1 billion in dividend for the 2013 financial year.
The dividend translates to N1 for every 50 kobo share held and comes in a year the company posted ‘not very impressive results’eventhough the management said it worked exceptionally to keep consolidated cost of sales well in check.
The company’s Chairman, Gbenga Oyebode said they would plant least 10,000 hectares of oil palm within the next three years and thereafter, a new 60 tonnes/hour oil mill would be erected to process the FFB produced, under the proposed investment plan.
At the company’s 34th Annual General Meeting (AGM) in Abuja, Oyebode said whilst prospects may not currently seem too optimistic, the company’s board feels there was still underlying potential for the company’s development within Nigeria, promising that opportunities exit to offer better returns for the shareholders in the future.
He said the company has begun the expansion of its current oil mill from 30t/hr to 60t/ hr at a cost of about N2.5 billion.
He said this will effectively make Okomu oil one of the largest mills in Africa, and certainly one of the newest technology, featuring tilting sterilizers, scheduled for completion in 2014.
However, the company’s consolidated results for 2013 showed that turnover -at N8.86 billion slipped 13 percent from N10.1 billion in 2012.
The chairman attributed this drop to a tough operating environment for agri-processing companies, especially seen in lower than average commodity prices and/or volumes.
Consolidated profit before tax was down 19 percent to N2.69 billion. Net profit on continuing operations also dropped 42 percent to N2.09 billion.
For the company’s oil palm business, the financial report showed total revenue for all palm products in 2013 lowering 13 percent to N5.62 billion than the previous year’s records. But cost of sales which was recorded at N2.45 billion was 3 percent lower than 2012 figures.
Gross profit recorded at N3.16 billion was 21 percent lower as profit on continuing operations for palm products also dropped by 41 percent to N1.32 billion from N2.26 billion in 2012.
Oyebode told the shareholders that notwithstanding lower yields, increased milling efficiencies allowed the oil mill to process 27,319 tonnes crude palm oil which was slightly higher than what was done in 2012.
“This fact was evidenced by a higher oil extraction rate, which averaged 21.22 percent for 2013, higher than in the previous year,” he said at the meeting,
For its rubber business, total rubber revenues also dropped 13 percent to N3.23 billion- but cost of sales went up marginally by 7 percent. Gross profit declined 22 percent to N1.82 billion.
Defending the company’s performance, Oyebode said rubber prices have, since the highs of 2011, dropped by nearly 50 percent, with a drop of 29 percent in 2012, followed by another 17 percent drop in 2013.
He said for the above reasons, profit on continuing rubber operations for 2013 declined 42 percent to N765 million.
He however told the company’s shareholders that the rubber factory processed 8,320 tonnes dry rubber in 2013, slightly higher than what was done the previous year.
He said notwithstanding the the drop in the commodity prices, the company continues to managed well, especially “under these trying times to generate profits and returns, albeit lower to the shareholders.”
He said this is evidenced in the price is the company’s shares which have not significantly declined in value.
Source: Business Day