Presco Raises Investors' Expectations for Better Returns
By Uche Obike
The improved performance recorded by Presco Plc during the first six months of its financial year has further raised the expectations of the shareholders that the second half of the financial year will come with increased returns on their investment in the company.
The company's unaudited financial results for the six months to June 30, 2004, released to the Nigerian Stock Exchange (NSE) recently showed a turnover growth to N1.2 billion compared with N1.1 billion for the same period in 2003, while profit before tax stood at N320 million lower than N339 for the same period in 2003.
The company's Profit after tax also dipped to N280 million compared with N339 million for the period in 2003.
Despite the marginal decline, the result is encouraging considering the tough operating environment that humbled the performance of most manufacturing companies during the year under review.
Interestingly is the fact that the management had pledged its determination to continue expanding the company to become the undisputed leader in the oil palm agro-industry through both expansion of planted areas and increased processing capacity.
Reviewing the company's performance during the year ended December 31, 2003, the Chairman, Chief Patrick I.G. Onyeobi reported that there was a 6.2 per cent increase in the volume of oil products sold during the year, compared with 2002, 14,809 metric tonnes of oil products were sold, which was short of our budget by 16.4 per cent.
According to him, despite the shortfall compared to the budget, turnover for the year was N2.1 billion, an increase of 55 per cent over the previous year, while profit after tax for the year was N375 million, compared with N153 million in 2002, an increase of 144 per cent.
Though commendable, he noted that this profit was short of their budget due to an increase in exchange rate losses occasioned by the depreciation of the naira against the dollar and euro, and provision for taxes and bad debts.
"The financial results of this year, as you can see, are impressive. We are mindful of the fact that last year's dividend was paid out of reserves which was to ensure that our integrity was maintained. It therefore behoves us to rebuild the depleted reserves while at the same time rewarding shareholders for their investment. Pursuant to this, your board has recommended a dividend of N250 million, that is 50 kobo per share, to be paid to shareholders, said the Chairman.
He disclosed that the acquisition of an additional 6,000 hectares of land at Ologbo in Edo State and its survey was completed, while access from the Benin-Sapele road was currently being surveyed. According to him, the expansion of the Obaretin Estate was in progress with surveying of lowland areas at the eastern side of the estate already underway, while drainage and clearing was scheduled for the first quarter of 2004.
He disclosed further the Mill improvements were carried out, such as the installation of two extra digesters and presses, installation of a sludge tank to improve the separation of TPO and effluent, construction of a second weighbridge and the automation of the kernel clay bath kaolin
He revealed further that the refinery improvements included an increase in cooling capacity from 114 kW to 292 kW, installation of an additional cooling tower, installation of new vacuum pumps, installation of a new steam ejector for the vacuum system and completion of construction of new boiler house.
In a bid to achieve its set objectives, the company recently established an outgrowers scheme which over 40 farmers had participated in.
This scheme is the oil development programme under the outgrowers scheme for the year. The management explained the outgrowers scheme was an initiative of Presco Plc with the financial support of the Edo State government aimed at promoting the cultivation of oil palm in Edo State in realisation of its sustainable and income generation potential for one rural populace.
Under the scheme, participating farmers receive high yielding planting materials, fertilizer, all material inputs and technical support from Presco, while the farmer's input is in the form land and labour.
Also, Presco provides ready market for the fresh fruit bunches from the farms, which are brought from the farmer at the market price.
Presco is hopeful that many more farmers will participate in the scheme next year, going by the inquiries and late applications received towards the end of this planting season.
Presco Plc has embarked on the restructuring of its debt portfolio which has led to paying off of the company's short-term loans with the proceeds of a syndicated long-term agricultural loan facility, structured by Investment Banking & Trust Company Limited (IBTC).
The Chairman recently told the shareholders that debt restructuring left Presco with a healthy, current asset and current liability ratio without any foreign debt.
He assured the shareholders that the company was poised to attain greater heights of achievement in future.
He recalled that during the year, the company received the Nigerian Stock Exchange 26th Annual President's Merit Award for the agriculture sector.
"This was a major achievement being our first year of listing on the Exchange and reflects positively on the company's plans for the future," he said.
He expressed satisfaction that active trading of their stock and the upward trend of its share price on the floor of the Exchange since the company became a public company.
He announced further that the company had been certified "organic" and produced organic olein and stearin for export to Europe.
"This opens up another market and opportunities for your company's products," he said.
Presco was incorporated in Nigeria on September 24, 1991 as Presco Industries Limited, a private limited liability company with an authorised share capital of N10,000 comprising 10,000 ordinary shares of N1 each and became a public limited liability company in February, 2002.
It owns oil palm plantation, a palm oil mill and palm kernel crushing plant, vegetable oil refining and fractionation plants that is at present, the only fully integrated company of its kind in West Africa.
The company specialises in the cultivation of oil palms and in the extraction, refining and fractionating of crude oil into vegetable oil and palm stearin.
The size of market available for the company's products such the demand for oil in Nigeria is almost one million per annum, while the domestic production capacity is about 700,000 tonnes.
The company supplies speciality fats and oils to the high quality specifications of its customers and assures a reliability of supply of its products the whole year round, due to the integration of the entire production cycle. It operates essentially from two estates, Obaretin Estate in Edo State (22 km from Benin City and Cowan Estate in Delta State (about 30 km south of Obaretin).
Presco at present is believed to be the only fully integrated project of its kind in West Africa with its own oil palm plantations, palm oil mill, palm kernel crushing plant and vegetable oil refining and fractionation plant. The company started operations in 1991, with the Obaretin and Cowan Oil palm estates.
The Obaretin Estate was originally initiated by the Bendel State Government in the 1970's as part of the state's oil palm development programme, while the control of the estate was relinquished to the private sector in 1985.
|
