Key points
- Okomu Oil Palm Plc reported a 12.03 per cent decline in pre-tax profit to N58.99 billion in the first half of 2026.
- Revenue fell 3.50 per cent to N125.29 billion, driven by weaker local and export sales.
- Profit after tax dropped 16.42 per cent to N39.73 billion, while earnings per share declined to N41.65.
- Rising production and operating costs, coupled with higher finance expenses, weighed on profitability.
- Despite weaker earnings, the company strengthened its balance sheet with higher cash reserves and a positive net current asset position.
Main Story
Okomu Oil Palm Plc recorded a 12.03 per cent decline in pre-tax profit to N58.99 billion for the six months ended June 30, 2026, as lower sales and rising operating costs weighed on the company’s financial performance.
The agribusiness firm disclosed in its unaudited financial statements filed with the Nigerian Exchange (NGX) that pre-tax profit fell from N67.05 billion recorded in the corresponding period of 2025.
Profit after tax also declined by 16.42 per cent to N39.73 billion, compared with N47.54 billion in the same period last year, while earnings per share fell to N41.65 from N49.83.
Revenue for the half-year declined by 3.50 per cent to N125.29 billion, down from N129.83 billion in the first half of 2025, reflecting weaker domestic and export sales.
Local sales, which accounted for more than 90 per cent of total revenue, declined by 3.19 per cent to N113.22 billion, while export sales dropped 6.38 per cent to N12.06 billion.
The slowdown was more pronounced in the second quarter, with revenue falling 7.52 per cent year-on-year to N66.33 billion. While local sales declined by 11.73 per cent, export sales rose 42.98 per cent to N7.90 billion, partially cushioning the overall revenue decline.
Profitability also came under pressure from higher production costs. Cost of sales increased by 3.84 per cent to N44.56 billion, despite lower revenue, driven by increases in both oil palm and rubber production costs.
Oil palm production costs rose 1.66 per cent to N37.61 billion, while rubber production costs climbed 17.51 per cent to N6.95 billion.
As a result, gross profit declined 7.13 per cent to N80.73 billion, while the company’s gross profit margin narrowed to 64.44 per cent from 66.95 per cent recorded a year earlier.
Operating expenses also increased during the period, with net operating expenses rising 12.23 per cent to N20.79 billion, contributing to a 12.37 per cent decline in operating profit to N59.94 billion.
Finance costs rose 8.85 per cent to N1.57 billion, largely due to an exchange loss of N1.18 billion. However, finance income increased significantly to N622.47 million, supported by stronger returns on fixed deposits and other interest-bearing balances.
On the balance sheet, the company recorded notable improvements in liquidity. Cash and cash equivalents increased 65.34 per cent to N21.40 billion, while inventories nearly doubled to N36.61 billion from N18.32 billion at the end of 2025.
Trade receivables also rose to N7.19 billion, and the company improved from a net current liability position of N2.49 billion at the end of 2025 to a net current asset position of N19.09 billion as of June 2026.
Long-term borrowings declined to N3.91 billion, although lease liabilities remained relatively unchanged at N18.28 billion.
On the Nigerian Exchange, Okomu Oil’s shares closed at N1,418.00 on Tuesday, representing a 29.5 per cent year-to-date gain from the opening price of N1,095.00 at the beginning of the year.
The Issues
Okomu Oil’s latest results reflect the pressure facing agribusiness companies from weaker sales and rising production costs. Although the company maintained strong profitability, cost inflation, exchange rate volatility and softer demand continue to challenge earnings growth. The improvement in liquidity and asset position, however, suggests the company remains financially resilient despite the earnings slowdown.
What’s Being Said
Okomu Oil Palm Plc (Financial Results):
Revenue declined 3.50 per cent to N125.29 billion due to weaker local and export sales.
Pre-tax profit fell 12.03 per cent to N58.99 billion, while profit after tax dropped 16.42 per cent to N39.73 billion.
The company maintained a stronger liquidity position with cash balances rising to N21.40 billion and net current assets improving to N19.09 billion.
What’s Next
Investors will be watching whether Okomu Oil can improve sales volumes and manage production costs in the second half of the year. Market attention will also focus on the company’s ability to sustain margins amid inflationary pressures, exchange rate movements and global demand for palm oil and rubber products.
Bottom Line
Okomu Oil remained profitable in the first half of 2026 despite reporting weaker earnings as declining sales and rising operating costs squeezed margins. Nevertheless, stronger liquidity, lower long-term debt and continued investor confidence, reflected in the stock’s nearly 30 per cent year-to-date gain, position the company to navigate current market challenges.
