… total revenue made in Nigerian markets
…. profitability of oil palm firms justifies investments in ESOPP
Presco Nigeria Plc, one of Nigeria’s biggest agro-allied firms, has set a new record as it recorded a huge profit after tax in the first six months of 2024. The company announced a profit after tax of N38.88 billion from January to June 2024, amounting to an increase of 158 percent over N15.08 billion profit made in the similar period of 2023.
The profitability of the oil palm firms that are based in Edo State, south-south Nigeria, shows the untapped enormous opportunities in the oil palm business. It also vindicates the Edo State Government that has invested and attracted huge investments into the state’s oil palm sub sector in the last six years through the Edo State Oil Palm Programme (ESOPP).
“To start with, you have to go for the value crops like oil palm, rubber, and cocoa. We started from that end because of the advantage we have in attracting investors. We did a forest audit and realized that we had quite a lot of land that, unfortunately, had been deforested, which we could use for oil palm cultivation.
“We then launched the Edo State Oil Palm Programme (ESOPP). It was not about just giving out land, but a programme where we help you get land, survey the land, demarcate, go to the communities, deal with the communities, engage them, compensate those who you need to compensate, then do your nurseries, and get planting materials. Today, we have the largest agricultural programme on the continent, with more than 70,000 hectares of oil palm plantation. There are 7 to 8 investors, and everybody is producing,” Godwin Obaseki, governor, Edo State said.
Presco within the first six months of 2024, raked in revenue worth N88.02 billion, higher than the N48.07 billion made in the same period of 2023 by 83 percent. With cost of sales at N22.43 billion at half-year 2024 as against N16.18 billion in the corresponding period of 2023, Presco was left with N65.59 billion as gross profit for the half year period ended June 30, 2024. This compares to N31.89 billion realised as gross profit in the same period in 2023.
Profit before tax was N50.44 billion as of June 2024 as against N20.89 billion as of June 2023, with a tax expense of N11.56 billion, Presco ended the first two quarters of 2024 with a profit after tax of N38.88 billion. This was a better result compared to N15.08 billion profit after tax that the firm realised in the corresponding period of 2023.
Interestingly, Presco made all its half-year revenue within the Nigerian markets. N88.01 billion of its revenue came from the sale of crude palm oil and refined products. As of June 2023, this product line generated N48.06 billion.
Another product line called mill-by-products, generated N6.10 million at half year 2024. This represented a decline of 62 percent when compared with N16.06 million that the firm made from the same product line as of June 2023.
Another important feature of all the transactions that took place at Presco is that they were all paid for at a point in time, not over time.
Over 50 percent of its cost of sales was incurred through the upkeep of mature plantings, harvesting and labour.
Presco is a fully-integrated agro-industrial establishment with oil palm plantations, palm oil mill, palm kernel crushing plant and vegetable oil refining and fractionation plant. It also has an olein and stearin packaging plant and a biogas plant to treat its palm oil mill effluent. It specialises in the cultivation of oil palm and in the extraction, refining and fractionation of crude palm oil into finished products.
Siat Group controls 60 percent while Nigerian Investors (institutional and private) control 40 percent.
