MON 31 JAN, 2022-theGBJournal- OKOMUOIL published its 2021FY unaudited financials on Friday (28 January), reporting an EPS growth of 44.5% y/y to NGN14.72 (2020FY: NGN10.19). The growth in EPS was driven by the stellar growth in the top line and higher finance income.
Revenue grew by 60.0% y/y in 2021FY, driven by the (1) increase in local demand, which supported local sales (+61.3% y/y); and (2) the company capitalizing on the global CPO deficit, growing export sales by a whopping 112.4% y/y. Pertinently, we highlight that the higher CPO prices (Average CPO price: USD1,206.70/mt in 2021 vs USD712.75/mt in 2020) in the period also supported the revenue growth.
Gross margin (+176bps) increased to 68.9%, following a slower increase in the cost of sales (+51.4% y/y) relative to revenue (60.0% y/y). However, EBIT margin declined by 339bps to 43.0%, owing to a 35.0% y/y increase in operating expenses.
The company recorded a net finance income in 2021FY, following a surge in finance income (NGN380.19 million; 2020FY: NGN7.13 million) amid a 174.5% increase in finance costs. The robust growth in finance income was driven by a higher exchange gain balance of NGN331.28 billion in 2021FY (2020FY: NGN0.79 million). On finance costs, the increase was due to higher exchange loss (526.6% y/y) and interest on long term loans (51.6% y/y) relative to 2020FY.
Overall, the company recorded a PBT growth of 51.1% y/y to NGN16.29 billion in 2021FY (2020FY: NGN10.78 billion). Following a tax expense of NGN2.24 billion, profit after tax printed NGN14.04 billion (2020FY: NGN9.72 billion).
As we expected, OKOMUOIL’s top line maintained double-digit expansion in 2021FY, a development we attribute to the improved demand (both locally and globally) alongside higher CPO prices.
For the year ahead, we highlight that the upsides favouring Nigerian CPO planters such as tight border controls, FX liquidity challenges and the attendant impact on importers, and government support remain existent and should benefit OKOMUOIL’s earnings.
”Thus, we remain optimistic about the company’s earnings growth,” says Cordros Research in their review of the company’s performance.
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