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BOPP’s earnings continue to benefit from higher CPO prices

Benso Oil Palm Plantation (BOPP) has reported a topline growth of 29.5%y/y (vs. 20.9%y/y in FY2019) to GHS123.82 million in FY2020 on the back of higher palm oil prices emanating from increased demand from China and India as well as production squeeze arising from labor shortages in key producing countries in the midst of the covid-19 pandemic. Commodity data from the World Bank shows that the price of Crude Palm Oil (CPO) rose by 33.1%y/y to USD1,016.37 per MT in 2020 while that of Palm Kernel Oil was up by 26.3%y/y to USD1,224.87 per MT.

 

Although operating expenses grew by 16.6%y/y (vs. 2.2%y/y in FY2019) to GHS11.19 million in FY2020, the growth was still below revenue growth. This helped to reduce the operating expense ratio (operating expenses/revenue) by 100bps to 9.0% in FY2020 from 10.0% in FY2019.

 

 

BOPP’s profit margins were enhanced by the rise in revenue plus the drop in the operating expense ratio. Profit before tax jumped by 124.8%y/y to GHS29.39 million in FY2020 while profit after tax surged by 155.8%y/y to GHS24.70 million in FY2020. The PAT margin nearly doubled to 19.9% in FY2020 from 10.1% in FY2019.

 

Global palm oil prices are expected to remain very strong in 2021 on the back of anticipated weak production arising from unfavorable weather pattern in key producing countries. In contrast, demand is expected to remain strong in 2021 on the back sustained robust demand from China and India, and enforcement of higher biodiesel mandates in Malaysia and Indonesia. In addition, anticipated disruptions to the supply of competing vegetable oils (soy, sunflower and rapeseed) could lead to increased demand for palm oil, which could push prices up.

 


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