Presco Plc has declared a pre-tax profit of N69.24 billion in its unaudited financial results for the first quarter ended March 31, 2026.
This represents an 18.2% increase from N58.61 billion recorded in the corresponding period of 2025.
The financial results filed with the Nigerian Exchange (NGX) at the weekend show strong gross margins, improved finance income, and a significant reduction in borrowing costs, despite pressures from exchange losses and a higher tax burden.
The agro-allied company recorded modest revenue growth, largely driven by its core crude and refined palm oil products, which continue to account for the bulk of its earnings.
Key highlights (Q1 2026 vs Q1 2025)
- Revenue: N100.86 billion, up 7.5% YoY
- Other income: N2.38 billion, up 78.8% YoY
- Cost of sales: N9.58 billion, down 4.8% YoY
- Gross profit: N91.29 billion, strong margin of 90.5%
- Administrative expenses: N15.14 billion, up 1.6% YoY
- Selling and distribution: N629.56 million, up 16.1% YoY
- Finance expense: N7.53 billion, down 28.5% YoY
- Finance income: N5.13 billion, up significantly from N59.13 million
- Pre-tax profit: N69.24 billion, up 18.2% YoY
- Income tax expense: N19.99 billion, up 81.2% YoY
- Post-tax profit: N49.26 billion, up 3.5% YoY
- Earnings per share: N42.22, down from N47.58
- Total assets: N802.38 billion, down 13.4%
- Total liabilities: N325.31 billion, down 32.7%
- Shareholders’ equity: N477.07 billion, up 7.8%
- Borrowings: N136.63 billion, down 56.9%
Driving the numbers:
Analysis of the company’s Q1 performance shows that revenue growth was primarily supported by its core palm oil segment, particularly crude and refined products.
- Revenue from crude and refined products stood at N95.80 billion, accounting for about 95% of total revenue, reinforcing the company’s dependence on its primary product line.
- Fresh Fruit Bunches contributed N4.94 billion.
- Nigeria remained the dominant revenue driver with N84.37 billion, while Ghana contributed N16.49 billion, reflecting the company’s growing regional footprint.
- Other income rose significantly by 78.8% to N2.38 billion, largely driven by miscellaneous operating income.
- On the cost side, cost of sales declined by 4.8% to N9.58 billion, supported by a sharp drop in raw materials consumed to N153.15 million from N2.11 billion.
- This helped push gross profit to N91.29 billion, translating to an exceptionally strong margin of 90.5%.
- Operating expenses showed mixed trends. Administrative expenses rose slightly by 1.6% to N15.14 billion, while selling and distribution costs increased faster at 16.1% to N629.56 million.
- Staff costs climbed 8.7% to N5.79 billion, accounting for a significant portion of administrative expenses.
- A major drag on the company’s performance was the exchange loss of N6.37 billion, compared to an exchange gain in the prior year, highlighting the impact of currency volatility.
- Finance costs declined sharply by 28.5% to N7.53 billion following a significant reduction in borrowings.
- Finance income surged to N5.13 billion, largely from fixed deposit earnings.
Despite the strong operational performance, a steep 81.2% increase in income tax expense to N19.99 billion weighed on bottom-line growth, limiting post-tax profit growth to just 3.5% at N49.26 billion. Earnings per share declined to N42.22 from N47.58.
Balance sheet position:
Presco Plc recorded a notable improvement in its balance sheet quality during the period, driven by aggressive deleveraging.
- Total assets declined by 13.4% to N802.38 billion, largely reflecting reductions in cash balances and other assets following financing activities.
- Total liabilities fell sharply by 32.7% to N325.31 billion, supported by a significant reduction in borrowings, which dropped by 56.9% to N136.63 billion. This has strengthened the company’s leverage position and reduced interest burden.
- Shareholders’ equity increased by 7.8% to N477.07 billion, with retained earnings rising to N225.34 billion.
- The company maintained a healthy liquidity position, with current assets of N353.05 billion compared to current liabilities of N134.93 billion.
- Cash and cash equivalents declined sharply by 48% to N136.54 billion, largely due to loan repayments and financing outflows.
- Inventories rose by 47% to N58.90 billion, indicating higher stock levels that could support future sales but may also tie up working capital.
- Exchange loss of N6.37 billion impacted operating results
- Tax expense surged by 81.2%, limiting profit growth
- Earnings per share declined due to increased share count
- Cash position weakened significantly due to financing outflows
- Selling and distribution expenses grew faster than revenue
- Administrative costs remain elevated, driven by staff and overhead expenses
The exchange losses, rising tax obligations, declining earnings per share, and reduced cash reserves present near-term concerns.
Market reaction:
The share price has remained stagnant at since the dividend announcement was released on Friday, May 1, 2026.
- Presco closed its last trading session on May 5, 2026, at N2,300 per share on the NGX.
- The stock has gained 58.6% year-to-date from its opening price of N1,450, ranking among the top-performing equities on the Exchange.
Presco is currently among the most valuable stocks on the Exchange, with a market capitalisation of approximately N2.68 trillion.
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