OKOMU OIL PALM NEEDS CAPITAL INJECTION?

There is no doubt at all that even from the latest figures for nine months to September, Okomu Oil Palm PLC has great prospects but the issue is: Does it presently have enough money?
The answer is no, according to the latest results. Yes, Okomu Oil ended the period with N1238m as cash in hand as against red balance of N1527.8m by September  2014.
However, this was principally because recourse to more long term borrowing more than doubled the closing balance here to N4060.2m from N1877.3m. Because of this, finance cost also more that doubled to N348.8m from N144.7m. Meanwhile working capital still dropped 46.7% to N1162.5m from N2077.9m.
Had this long term fund been from cost free new money from shareholders, Okomu oil Palm would today be doing battle with only increasing overheads and come out of it as the all round winner.
Sure, in spite of the near doubling ( up 99.2%) of the administration bill, to N3671m, Okomu Oil Palm reported 23.% increase in profit to N2555.6m from N2077.9m.
This resulted from good growth in main business income by 12.3% to N7750.4m accompanied by 58.3% drop in cost of producing the goods so sold to N1225.5m and equally impressive 18.5% decrease in distribution and sales cost to N108.1m from N132.6m.
All of that was good recipe for the increase in profit margin from 29.2% to 32.3%.
So imagine what it would have looked like if Okomu Oil did not have to cough out doubled finance charges.
HENCE:
* Perhaps, it was time to critically look at Okomu Oil Palm to see if it is overtrading and so, needs new capital.
* For now, there is no doubt about it, Okomu Oil Palm is one of the few companies in today's Nigeria having a good run.

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