Is Okomu Oil Palm set to halt undulating earnings trend?
Category: Best data-driven reporting (small and large newsrooms)
Organisation: BusinessDay Media Limited
Organisation size: Big
Publication date: 28/10/2019
Credit: Oluwasegun OLAKOYENIKAN
One of Nigeria’s largest producers of oil palm, Okomu Oil Palm is showing signs of maintaining steady growth in earnings following the decision of the Nigerian government to close the country’s land borders with neighbouring countries such as Benin and Niger in a bid to curtail the smuggling of food items and proliferation of firearms in the porously bordered West African country. Okomu earnings have come under pressure despite having a huge market share in Nigeria’s oil palm making industry which is battling with illegal importation of cheaper oil palm products.
The closure of the Nigeria’s land border was interpreted as having enormous consequences on the Nigerian economy which struggled for growth since it emerged from recession in 2017. While that may not be entirely incorrect, the projects is gradually changing narratives that even though there are some negative implications of the border closure on international trade and Nigeria’s relationship with other West African countries, it is helping struggling companies in the manufacturing and agriculture industries — which the Nigerian government regard as priority areas — market their products to local customers, grow sales and bolster income. Okomu’s likely return to the path of steady profitability is a testament to the Nigerian government plans to bolster local capacity of essential food items, particularly oil palm which Nigeria used to be one of the world’s largest net exporters in the 1980s.
I used Microsoft Excel to analyse the data which show that Okomu Oil Palm has an historic challenge of growing earnings steadily. This is because of myriads of saboteurs taking advantage of federal government policies and infiltrating the country with cheaper imports. So really understand this challenge, I gathered the financial statement of Okomu for five years, history of dividend payments, and stock price data from the Nigerian Stock Exchange (NSE). All these were carefully inputted using Excel sheets and analysed critically. The company has a record of reacting positively or negatively to federal government’s policies relating to international trade, the border closure is one of the few instances the oil-palm making industry will react positively of the government policy. While the company was unable to sustained positive trend in the past when policies that could help it grow were made, the story looked at the potentials for the company to meaningfully maximise the opportunity this time for sustained performance.
What was the hardest part of this project?
The major challenge is analysing the impact of a company using a company’s financial results. While financial statements are beyond how the much a company realises as profit in a period, I went deeper to extract what changed since the Nigerian government decided to close its land borders. The basis for this is because the company is the biggest publicly-listed oil palm maker in Africa’s most populous nation with a vast area of farmland in Benin-City, Nigeria. Also, most fast-moving consumer goods firms serving an estimated population of 200 million people rely largely on Okomu for the oil palm products, letting go of other illegally products in a move that would reduce pressure in Nigeria’s foreign exchange market and help the nation’s currency remain stable.
What can others learn from this project?
What others can learn is that there is a lot happening to big companies in our respective countries, many of which their aggregate production capacity/value takes a bulk of our countries’ economy size we celebrate as Gross Domestic Product (GDP). To find out this, we need to understand how to dig into their financial statement, get facts, analyse and make meaning out of the facts for our audiences, this could help in shaping their perspectives about critical national issue.