Haldane McCall Plc Q2 2025 Results – Steady Profitability and Strong Equity Backing Amid Growth in Inventories

Haldane McCall Plc has reported a stable performance for the half-year ended June 30, 2025, demonstrating consistent profitability, healthy balance sheet strength, and improved asset base — although growth in inventories and receivables may require close monitoring for operational efficiency.

🔑 Key Highlights from the Financial Results:

📈 Profitability Maintained

• Revenue declined significantly by 57% YoY to ₦1.20 billion (from ₦2.78 billion in H1 2024), raising questions on top-line sustainability.
• Despite the fall in revenue, gross profit held steady at ₦998 million, supported by a significant drop in cost of sales.
• Operating profit improved slightly to ₦423 million, showcasing cost efficiency despite reduced other income (₦1.4 million vs. ₦42.9 million in prior year).
• Profit after tax stood at ₦283 million, up 3.8% YoY from ₦273 million.

💰 Strong Equity Position

• Shareholders' funds rose to ₦16.64 billion, up from ₦14.21 billion — driven by retained earnings growth and increased revaluation reserves.
• Revenue reserve increased to ₦5.03 billion, showing the company’s ability to generate and retain earnings consistently.

💼 Balance Sheet Observations

• Total assets grew to ₦20.83 billion (from ₦18.62 billion), largely due to a significant increase in inventories, which surged by 161% to ₦5.92 billion. This may indicate buildup for future sales or possible inefficiencies in stock turnover.
• Trade and other receivables declined by almost 49%, a positive sign of improved receivables management or reduced credit sales.
• Cash and equivalents fell to ₦127 million (from ₦199 million), possibly due to working capital commitments.

📉 Debt and Liabilities

• Total liabilities slightly reduced to ₦4.20 billion (from ₦4.41 billion), improving the debt-to-equity ratio.
• Bank overdrafts and short-term loans remain notable but manageable in relation to equity base.

✅ Strengths

• Consistent profitability even in the face of falling revenues.
• Robust equity base (₦16.6 billion), providing financial flexibility.
• Improved operational efficiency as operating profit margin held firm.
• Low gearing with manageable finance cost (₦5.1 million only).
• Revaluation reserve growth shows possible appreciation in property, plant, and equipment.

⚠️ Weaknesses / Risks

• Revenue contraction is a major concern; if continued, it could eventually pressure margins.
• Heavy inventory buildup might indicate slower sales turnover or overstocking, which could strain cash flows.
• Declining cash may restrict liquidity unless managed prudently.
• Overreliance on equity funding (e.g., ₦5 billion in "deposit for shares") could signal delays in finalizing capital structure.