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Okomu Oil Palm intends to pay a special cash reward to shareholders any moment from now, after its net profit for the first nine months of the year surged more than twofold to N60.3 billion, its second interim dividend this year.
The board approved the payout as part of its resolutions at a meeting on Thursday, a regulatory filing at the Nigerian Exchange on Friday stated, marking a breakaway from the tradition of paying one interim dividend annually.
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The company has been prioritising dividend payment over retaining most of its earnings lately, choosing immediate shareholder value improvement over taking the long view.
Its first dividend for the year, announced after its half-year result, totalled N28.6 billion at N30 per share, with payout ratio, the portion of net profit that is allocated to paying dividend, as high as 60.2.
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“Management continues to reaffirm its commitment to self-funded operations, relying on operating cash flows to meet obligations and gradually unwinding existing borrowings, highlighting the company’s robust cash-generating capacity,” investment bank CardinalStone, said in a research note in August.
“This has also fuelled a consistent dividend-paying policy,” it added.
The financial report of the Edo State-based company for the review period, released on Friday, showed turnover expanded by 67.3 per cent to N103.9 billion, compared to the same period of last year.
In a way, that substantial growth in top line helped cushion the blow, which a sharp slide in finance income would have had on net profit as it fell to N317 million from N8.2 billion.
Local sales alone accounted for about nine-tenths of the revenue of the agro-processor, whose products includes crude palm oil, palm kernel, palm kernel oil and rubber among others. Exports contributed the rest, valued at N19.1 billion, compared to N16 billion a year ago.
The dramatic increase in after-tax profit owed its debt in part to an effective cost management. That, perhaps, is most noticeable in the proportion of cost of sales to revenue, which dropped to 35.6 per cent from 42.9. Finance costs also fell to N2.3 billion from N8.7 billion, boosting profit.
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Last month, Edo State Forestry Commission disclosed that it had commenced a reforestation initiative with Okomu Oil towards planting more than 3,000 forest trees in the Ovia South West Local Government.
The climate action push plans to help expand the scope of the state’s forest cover, with Okomu Oil saying it has dedicated around 3,000 hectares of its concession as protected forest areas towards that course.
Pre-tax profit enlarged by 106.7 per cent to N84.1 billion, while profit after tax jumped to N60.3 billion from N28.3 billion, implying a 112.9 per cent increase.
Net profit margin, a performance indicator that shows how much of revenue that has been turned into profit, stood at 34.7 per cent, up from 27.3.
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