Last Update 13 Nov 25
Wane_Investment_House made no meaningful changes to valuation assumptions.
Sector: Agriculture / Edible Oils
Analyst View: Exceptional performance — robust volume growth, efficiency gains, and strong earnings momentum sustain market leadership.
Executive Summary
Presco Plc delivered record-breaking earnings for the nine months ended 30 September 2025, with profit before tax (PBT) soaring 108.2% YoY to ₦139.7 billion. The company’s strong financial performance reflects superior operational execution, efficiency in cost management, and resilient demand across its edible oil, palm derivatives, and by-product lines. Revenue more than doubled to ₦274.5 billion, driven by both higher crude palm oil (CPO) prices and increased production volume following capacity expansion and yield improvement from maturing plantations. On the back of this stellar performance, the Board declared a second interim dividend of ₦10 per share, reinforcing Presco’s reputation as a consistent value creator in Nigeria’s agribusiness sector.
Key Financial Highlights (Group)
Metric 9M 2025 (₦m) 9M 2024 (₦m) YoY Change
Revenue 274,501 128,568 +113.5%
Gross Profit 202,090 92,487 +118.5%
Operating Profit 165,965 74,934 +121.5%
EBITDA 170,895 78,373 +118.1%
Profit Before Tax 139,653 67,074 +108.2%
Profit After Tax 110,786 51,765 +114.0%
Earnings per Share (kobo) 11,079 5,177 +114.0%
EBITDA Margin 62.3% 61.0% +1.3ppt
PBT Margin 50.9% 52.2% -1.3ppt
Operational Performance Analysis
Topline Expansion: Revenue surged 113.5% YoY on the back of higher palm oil yields and increased milling throughput. The company benefitted from improved crude palm oil extraction rates, strong domestic pricing, and stable demand from downstream manufacturers.
Cost Efficiency: Cost of sales rose 100.9% YoY, slightly below revenue growth, enabling gross margin expansion to 73.6% (2024: 71.9%). This reflects economies of scale and improved cost control in plantation operations and refining activities.
Operating Expenses: Administrative and selling expenses increased moderately (+56.8% combined), reflecting higher energy costs and wage adjustments. However, the operating leverage effect from top-line growth maintained strong profitability.
Finance Costs: Finance expenses increased 234.7% YoY to ₦29.98 billion, primarily due to new borrowings to finance capacity expansion and working capital. However, this was partly offset by a surge in finance income (₦3.7 billion vs ₦0.6 billion), likely from investment yields and FX translation gains.
Exchange Gains: The ₦2.2 billion exchange gain provided an additional boost to operating income, reflecting naira revaluation effects and export proceeds.
Bottom Line: Net profit jumped 114% YoY, underscoring strong operational efficiency and strategic balance sheet management.
Financial Position
Metric 30 Sep 2025 (₦m) FY 2024 (₦m) YoY Change
Total Assets 612,819 475,096 +29.0%
Total Liabilities 410,594 263,912 +55.6%
Total Equity 202,225 211,185 -4.2%
Retained Earnings 195,515 126,729 +54.3%
Current Ratio 1.25x 0.98x +27.7%
ROE 54.8% 36.8% +17.9ppt
ROA 18.1% 16.4% +1.7ppt
Commentary:
• Balance Sheet Strength: Total assets expanded by 29% to ₦612.8 billion, supported by growth in property, plant & equipment and biological assets.
• Leverage Increase: Total borrowings rose due to expansion projects, but gearing remains manageable given strong cash flow coverage.
• Equity Adjustment: Slight dip in total equity reflects dividend distributions, though retained earnings climbed sharply on higher profits.
• Liquidity: Improved current ratio and strong cash generation signal healthy working capital management.
Profitability Ratios
Ratio 9M 2025 9M 2024
Gross Margin 73.6% 71.9%
EBITDA Margin 62.3% 61.0%
Net Margin 40.3% 40.2%
ROE (Annualised) 54.8% 36.8%
Presco continues to post best-in-class profitability metrics within Nigeria’s agribusiness space, supported by vertical integration — from plantation to refining and distribution.
Outlook
Short-term drivers:
• Sustained high domestic demand for palm oil and refined products.
• Ongoing yield improvement from maturing plantations.
• Improved operational uptime and refinery throughput.
Medium-term catalysts:
• New capacity expansion projects and value-added derivative production.
• Ongoing backward integration and mechanisation.
• Potential export diversification amid regional trade opportunities (AfCFTA).
Target Drivers: Earnings expansion, dividend consistency, and capacity growth.
Risks:
• FX volatility and import inflation for inputs.
• High interest environment increasing finance costs.
• Weather and climate risks impacting agricultural yields.
Dividend
• Second Interim Dividend: ₦10.00 per share
• YTD Total Dividend: ₦20.00 per share (if combined with prior interim)
• Payout Ratio: c.18% (conservative, allowing reinvestment for growth)
This signals management’s confidence in cash flow strength and long-term profitability sustainability.
Strategic Commentary
“Presco’s performance is a reflection of its disciplined strategy of integrating efficiency, innovation, and sustainability into its agribusiness model. The company’s strong yield management, cost discipline, and investment in modern refining capacity have cemented its dominance in the edible oils market.”
Analyst Conclusion
Presco’s 9M 2025 performance reinforces its position as Nigeria’s most profitable and efficiently run agribusiness. With revenue and earnings more than doubling year-on-year, the company’s strategy of vertical integration and operational excellence is clearly paying off. At current run rates, FY2025 full-year PBT could surpass ₦180 billion, with strong potential for further dividend rewards. Despite rising debt, Presco’s return on equity (54.8%) and EBITDA margin (>60%) remain industry-leading.
How well do narratives help inform your perspective?
Disclaimer
The user Wane_Investment_House 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.