WED JULY 29 2026-theGBJournal| Okomu Oil Palm Company reported a sharp decline in second-quarter earnings as softer domestic crude palm oil prices and intensifying import competition eroded revenue and compressed margins, underscoring the pressure facing Nigeria’s leading palm oil producers despite improving seasonal output.
Okomu Oil posted a 37.5 per cent year-on-year decline in standalone earnings per share (EPS) to N16.91 for the three months ended June 2026, down from N27.05 a year earlier.
The weaker performance reflected a 7.5 per cent fall in revenue and a sharp contraction in profitability, with the company’s EBITDA margin narrowing by 906 basis points to 39.4 per cent.
The weaker second-quarter performance dragged first-half earnings lower, with H1-2026 EPS declining 16.4 per cent to N41.65, compared with N49.83 in the corresponding period of 2025.
Revenue fell 7.5 per cent year-on-year during the quarter, extending the first-half decline to 3.5 per cent.
The downturn was largely driven by an 11.7 per cent drop in domestic palm oil sales, which accounted for 88.1 per cent of total revenue, outweighing a robust 42.9 per cent increase in export rubber sales that contributed the remaining 11.9 per cent.
The company’s domestic business came under pressure as lower realised crude palm oil prices reflected persistent competition from imported products, limiting pricing power in the local market.
The weaker pricing environment more than offset the benefits of stable demand, weighing on both top-line growth and operating profitability.
On a sequential basis, however, revenue rose 12.5 per cent from the previous quarter, supported by the seasonal recovery in oil palm production, suggesting underlying output remains resilient even as pricing conditions continue to challenge earnings.
Gross margin contracted by 11.32ppts y/y to 50.5% in Q2-26 (H1-26: -252bps y/y to 64.4%), as cost of sales increased by 19.9% y/y despite lower revenue.
The contraction reflects a combination of weaker realised palm oil prices and higher production costs, which weighed on profitability during the quarter.
Consequently, EBITDA and EBIT margins contracted by 11.86ppts y/y and 12.44ppts y/y to 39.4% and 36.9%, respectively (H1-26: -430bps y/y and -484bps y/y to 50.5% and 47.8%, respectively) notwithstanding a modest 0.7% y/y increase in operating expenses.
Below the operating line, OKOMUOIL recorded net finance income of N433.68 million in Q2-26 (Q2-25: net finance cost of N515.52 million), supported by higher finance income (+18.9x y/y) and a 65.7% y/y decline in finance costs to N187.75 million.
In H1-26, net finance cost declined by 29.5% y/y to NGN954.9 million (H1-25: N1.35 billion).
Finally, profit before tax (PBT) declined by 28.6% y/y to N24.89 billion in Q2-26, while profit after tax (PAT) declined by 37.5% y/y to N16.13 billion.
For H1-26, PBT declined by 11.9% y/y to N59.05 billion, while PAT fell by 16.3% y/y to N39.80 billion.
Okomu’s results reinforce concerns that sustained import competition and softer domestic palm oil prices could continue to pressure margins in the near term, even as stronger export performance and seasonal production gains provide some support to volumes.
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