Yaoundé - 09 December 2023 -

Socapalm's H1 2023 profit up 15.6% yoy, despite lower production

Socapalm's H1 2023 profit up 15.6% yoy, despite lower production
  • Comments   -   Thursday, 26 October 2023 12:47

(Business in Cameroon) - Cameroon’s palm company Socapalm reported a 15.6% increase in net profit after tax during the first half of 2023, reaching CFA13.7 billion, up from CFA11.8 billion on June 30, 2022.

This positive performance was achieved despite a notable decline in the production of both palm oil and palm kernels. According to the company's report, crude palm oil production saw a 12.2% year-on-year decrease, dropping from 110,445 tons at the end of June 2022 to 96,918 tons during the same period in 2023. Simultaneously, palm kernel production declined by 12.4%, falling from 23,516 tons to 20,589 tons between the two periods.

"We've witnessed a significant surge in the costs of agricultural inputs, production factors, and land rents, as have many companies. However, our ability to maintain these results can be attributed to our rigorous management of operating expenses and ongoing advancements in agricultural and industrial techniques," explains the Socapalm Board of Directors.

Higher costs

Moreover, despite the decline in production, the company experienced an upturn in sales over the period. According to the activity report, the turnover increased by CFA7.4 billion in the first half of 2023, marking a 14.5% rise. Socapalm attributes this to an uptick in the approved selling price of crude palm oil and a more favorable valuation of palm kernels, which offset the reduction in crude oil production.

The company does not provide specific details regarding what it means by "more favorable valuation of palm kernels." However, sources within the palm oil industry confirm that a readjustment of the price at which Socapalm sells its product to the processing industry was discreetly decided in 2022.

"During a meeting of the Oilseed Sector Regulation Committee, Socapalm cited production challenges arising from the significant proliferation of small-scale oil mills in village plantations. Consequently, these plantations now prefer to process their oil rather than supply palm nuts to Socapalm mills. In response to this situation, it was agreed that to attract more palm nuts from village plantations, Socapalm should increase its purchase price per kilogram of palm nuts from CFA60 to CFA100. To support this initiative, it was also decided that the selling price of Socapalm's crude palm oil to the processing industry will be raised from CFA450 per liter to CFA550," our source explains.

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