Cutix Plc, a leading manufacturer of electric cables, has released its Q1 2026 financial results for the period ended July 31, 2025, posting a pre-tax profit of N84 million.
This represents an 81% YoY decline, driven by slower revenue growth, rising raw material costs, and higher interest expenses.
Revenue from cable sales, the company’s main income source, declined by 7.40% to N3.282 billion.
At the same time, the cost of raw materials rose by about 7% YoY, pushing the cost of sales to N2.898 billion in Q1.
This led to a gross margin compression of over 21%, dropping to 18%.
Although administrative and distribution expenses declined, the savings were insufficient to offset the revenue shortfall and rising input costs. As a result, operating profit fell by 35% YoY to N276 million, just 18% of FY 2025’s full-year profit, reducing the operating margin to 8%.
Finance costs continued to mount, reaching N191 million, up from N73 million in the prior year and already 43% of last year’s full finance costs. This spike, driven by interest on term loans, commercial papers, and overdrafts, reduced the interest coverage ratio sharply to 1.44x from 5.79x a year earlier.
Consequently, net profit declined by 81% to N57 million, representing just 6% of the prior year’s full profit.
Balance Sheet
On the balance sheet side, total assets rose to N10.677 billion, reflecting a 33.56% YoY growth, driven largely by current assets, which make up over 57% of the asset base.
- Inventories and trade receivables were the key contributors, together accounting for more than 56% of total assets.
- Retained earnings, however, fell steeply by 72% to N711 million, while total borrowings surged 175% to N5.004 billion, now representing 47% of total assets. The drop in retained earnings highlights weaker profitability, while the surge in borrowings shows greater reliance on debt to sustain operations and expansion.
- With nearly half of its assets funded by debt, Cutix’s capital structure is significantly more leveraged, amplifying both return potential and financial risk in a high-interest rate environment.
Key highlights:
- Revenue: N3.524 billion; -0.81% YoY
- Cost of Sales: N2.898 billion; +5.43% YoY
- Gross Profit: N626 million; -22.15%
- Administrative Expenses: N276 million; -9.45% YoY
- Operating Profit: N276 million; −34.71% YoY
- Finance Cost: N191 million; +160.30% YoY
- Pre-tax Profit: N86 million; −81.04% YoY
- Total Assets: N10.677 billion; +33.56% YoY
As of market close on August 29, 2025, shares of the company were priced at N3.50, reflecting a year-to-date gain of 52.2%.
Insight:
On the topline, revenue contraction and escalating input costs weighed heavily on margins, with operating and pre-tax profitability falling
On the balance sheet, asset growth was largely tied to inventories and receivables, which raises concerns about liquidity and working capital efficiency.
- More worrying is the combination of a 72% erosion in retained earnings and a 175% surge in borrowings, which has tilted the company towards a more debt-heavy structure.
For investors, the 52% YtD share price rally reflects optimism about Cutix’s positioning in Nigeria’s cable industry.
However, the fundamentals suggest rising risks: unless receivables are collected faster, inventory turnover improves, and debt costs are contained, profitability and dividend payments may be muted for the current financial year.
Notably, the company has declared a final dividend of 10 kobo per share for the 2025 financial year, scheduled to be paid on September 2, 2025.
