Okomu Oil reports 12 percent drop in half-year profit on weaker sales
Nigerian palm oil producer Okomu Oil saw first-half earnings fall 12 percent as rising production costs and softer domestic demand compressed margins, signaling potential headwinds for agricultural equities in the region.
Okomu Oil Palm Plc reported a 12 percent decline in first-half pre-tax profit to N58.99 billion, weighed down by shrinking revenue and expanding production costs. The Nigerian agricultural company’s profit after tax fell 16.4 percent to N39.73 billion for the six months ended June 30, 2026, reflecting a broader squeeze on its bottom line.
Top-line growth stalled as total revenue slipped 3.5 percent to N125.29 billion. Domestic sales, which make up over 90 percent of the company's income, dropped 3.2 percent to N113.22 billion, while export revenues fell 6.4 percent. This top-line contraction was compounded by a 3.8 percent increase in the cost of sales, pushing the gross margin down to 64.4 percent from 67.0 percent a year earlier.
The slowdown accelerated in the second quarter, with pre-tax profit plunging 27 percent sequentially and 28.6 percent year-on-year to N24.89 billion. Quarterly revenue dropped 7.5 percent to N66.33 billion as local sales tumbled nearly 12 percent. Meanwhile, net operating expenses climbed 12.2 percent to N20.79 billion, further eroding operating profit, which fell 12.4 percent to N59.94 billion for the half-year.
Finance costs also rose 8.9 percent to N1.57 billion, driven primarily by a N1.18 billion foreign exchange loss. Despite the earnings pressure, Okomu Oil strengthened its balance sheet significantly during the period. Total assets expanded 20 percent to N166.71 billion, while cash reserves surged 65 percent to N21.40 billion.
The company successfully transitioned to a positive net current asset position of N19.09 billion, reversing a N2.49 billion deficit at the end of 2025. However, this liquidity boost coincided with inventories nearly doubling to N36.61 billion, suggesting potential stockpiling or slower inventory turnover that investors will need to monitor closely in the second half of the year.
Earnings per share for the half-year declined to N41.65 from N49.83 in the prior-year period. Shares of Okomu Oil closed at N1,418 on the Nigerian Exchange on Tuesday, maintaining a strong 29.5 percent year-to-date gain despite the recent earnings miss.
