Presco Plc kicked off 2025 with exceptional momentum, doubling both its top- and bottom-line earnings in the first quarter, driven by robust pricing, increased production volumes, and operational leverage across its vertically integrated palm oil operations.
🔑 Key Highlights from Q1 2025 Results:
- Revenue: ₦93.8 billion ▲ +120.4% YoY (Q1 2024: ₦42.5 billion)
- Gross Profit: ₦86.1 billion ▲ +154.8% YoY
- Operating Profit: ₦69.1 billion ▲ +117.6% YoY
- EBITDA: ₦71.6 billion ▲ +117.9% YoY
- Profit Before Tax (PBT): ₦58.6 billion ▲ +97.6% YoY
- Profit After Tax (PAT): ₦47.6 billion ▲ +97.8% YoY
- Earnings Per Share (EPS): ₦4.76 ▲ +97.8% YoY
- Total Assets: ₦548.6 billion ▲ +15.5% from FY 2024
- Equity: ₦178.9 billion ▼ -15.3% from FY 2024
📈 Revenue and Profit Soar Amid Strong Operational Performance
Presco more than doubled its revenue year-on-year, reflecting favorable market conditions for crude palm oil, improved production efficiency, and solid sales execution. This top-line growth translated into a near-doubling of net profit, marking Presco’s most profitable first quarter on record.
The massive 154.8% growth in gross profit and a 117.6% surge in operating profit highlight the company’s ability to translate revenue growth into earnings expansion, despite rising cost pressures in the broader economy.
⚙️ Strong EBITDA Margin Reinforces Operational Resilience
The company’s EBITDA margin remained strong, with a 117.9% increase, underscoring operational discipline, scalability of its plantation business, and vertical integration advantages. With EBITDA hitting ₦71.6 billion, Presco continues to demonstrate high cash-generating capacity, essential for reinvestment and debt servicing.
📉 Equity Dip Despite Solid Fundamentals
While total assets increased by 15.5% to ₦548.6 billion, shareholders’ equity dropped by 15.3%, driven possibly by changes in retained earnings or revaluation reserves amid higher liabilities:
- Total Liabilities: ₦369.6 billion ▲ +40.1% YoY
- Current Liabilities: ₦179.3 billion ▲ +2.5%
- Current Assets: ₦232.4 billion ▲ +36.1%
The rise in liabilities may reflect increased borrowings or working capital financing to support scale expansion and capacity upgrades. However, the significant growth in current assets suggests improved liquidity and inventory buildup for continued production ramp-up.
📊 Outlook: Favorable Pricing and Expansion Drive
Presco’s Q1 results position the company as a standout performer in Nigeria’s agribusiness and consumer goods space. With the ongoing global demand for vegetable oils and food inflation trends, the company appears well-placed to sustain its growth trajectory.
However, the decline in equity relative to asset growth flags the need to monitor the company’s capital structure closely, especially if leverage continues to climb.
Presco’s explosive Q1 growth and margin expansion signal a strong strategic execution and resilience in a volatile macro environment. Investors should watch for how management navigates balance sheet pressures while capitalizing on elevated demand and pricing tailwinds in the quarters ahead.
How well do narratives help inform your perspective?
Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:PRESCO. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.