In the third quarter of 2025, crude palm oil (CPO) prices experienced a significant rise, leading to tighter global supply chains and improved profit margins for Nigerian producers, notably Presco Plc, according to insights from investment firm CardinalStone.
During this period, the Malaysian CPO benchmark averaged $1,009.08 per metric tonne, marking a 7.5% increase from the previous quarter. This upward trend was largely driven by increased export levies in Malaysia and Indonesia’s B40 biodiesel policy, which redirected a substantial portion of production towards domestic consumption.
CardinalStone analysts attribute the price hike to constrained supply coupled with robust local demand in major producing countries. They anticipate that Nigerian CPO prices will remain elevated, supported by limited import volumes and consistent industrial demand.
Presco’s Competitive Advantage Through Integration and Enhanced Product Offerings
As Nigeria’s leading palm oil producer, Presco is strategically positioned to benefit from the global price surge. The company’s approach of stockpiling during peak harvest seasons is expected to mitigate the impact of reduced yields during off-peak periods, as highlighted by CardinalStone.
Moreover, Presco’s portfolio of premium refined palm oil products, along with its strategic acquisition of Ghana Oil Palm Development Company (GOPDC) for $124.9 million completed late last year, is projected to fuel revenue growth and improve profit margins.
Presco is on track to record its strongest financial results ever, having already exceeded its total net income for 2024 within the first half of 2025. The company reported a half-year profit of N88.7 billion, surpassing the full-year profit of N77.7 billion from 2024, with revenues reaching N198.7 billion for the six months ending June 2025.
CardinalStone forecasts that by the close of 2025, Presco’s profit after tax could hit N142.67 billion, with revenues rising to N389.52 billion. Achieving these figures would mark the company’s most impressive financial performance in over 30 years.
Additionally, Nigeria’s easing inflation has helped reduce packaging and refining costs, further enhancing Presco’s profitability. However, the company’s considerable debt burden means borrowing expenses are expected to stay high in the upcoming quarter.
Okomu Oil Palm’s Growth Moderated by Seasonal Production Fluctuations
For Okomu Oil Palm Plc, CardinalStone expects year-on-year revenue growth in Q3, driven by higher CPO prices that offset a drop in output. Nonetheless, sequential quarterly earnings may decline due to the industry’s typical lean season.
Analysts also noted that Okomu’s rubber segment revenues are likely to improve in the second half of the year, aligning with the traditional peak sales period for rubber. However, since rubber contributes roughly 10% to total sales, its overall effect on profitability will be limited.
Okomu demonstrated impressive profit growth, with net income rising from N20.19 billion in the first half of 2024 to N47.5 billion in the same period this year, representing a 135.2% increase.
The company’s strong cash position and low debt levels are key factors supporting its profitability. CardinalStone emphasized that Okomu’s conservative leverage approach provides a financial advantage, resulting in more favorable net finance costs.
Both Presco and Okomu are expected to continue benefiting from stable CPO prices through the final quarter of 2025. However, CardinalStone suggests that Presco’s vertically integrated business model and larger scale offer a stronger cushion against market fluctuations in the current high-price environment.
“With inflation easing and palm oil prices holding steady, Presco emerges as our top recommendation within Nigeria’s palm oil sector,” the analysts concluded.