October 30, 2024/CSL Research

Presco Plc (PRESCO) reported a strong 67.3% y/y increase in Revenue for the first nine months of 2024, reaching N128.57 billion compared to N76.87 billion in 9M 2023. On a quarterly basis, however, Revenue fell slightly by 10.9%, from N45.48 billion in Q2 to N40.55 billion in Q3. The substantial y/y growth in 9M 2024 Revenue to N128.5bn, which has already surpassed the N102.42 billion reported for the full 2023 fiscal year, was primarily driven by increased local demand for crude palm oil (CPO) across both industrial and household sectors. Higher sales of mill by-products, Fresh Fruit Bunches (FFB), and CPO—combined with upward price adjustments in response to the Naira’s depreciation—further bolstered Revenue. Additionally, global CPO prices rose by 10.2% to US$921.25 per tonne in Q3 2024, adding further support to Presco’s Revenue growth.

Presco Plc reported a 29.2% y/y increase in Cost of Sales for the first nine months of 2024, rising to N36.08bn from N27.93bn in the same period of 2023. However, on a quarterly basis, there was a marginal decline of 0.3% in Q3 2024 to N13.65 bn from N13.69bn in Q2 2024. As a result, the company’s Gross Margin improved to 71.9% in 9M 2024 up from 63.7% in 9M 2023. Gross Profit also saw substantial growth, increasing by 89% y/y to N92.49bn from N48.94bn. However, on a q/q basis, Gross Profit decreased by 15.4%, falling to N26.89bn in Q3 2024 from N31.8bn in Q2 2024

Despite an increase in Operating Expenses due to a high-cost business environment—rising by 41.1% y/y to N20.85bn, up from N14.78bn in 9M 2023—Presco Plc (PRESCO) saw growth in its EBITDA margin, which increased by 11.3 percentage points to 55.7%. Overall, the company reported Operating Profit of N71.64bn in the first nine month of 2024, a significant 109.7%% y/y increase. However, in the second quarter of 2024, Operating Profit declined by 14.7% q/q to N20.85bn, down from N24.43bn in Q2 2024.

PRESCO reported a significant increase in Finance Income, which rose to N375m in 9M 2024 from N29.59m in 9M 2023. This increase was primarily driven by higher interest earnings on the company’s fixed deposit balances. Meanwhile, Finance Costs, which include interest expenses on loans and overdrafts, increased by 39% y/y to N8.44bn, up from N6.07bn in the same period last year. The company also reported a foreign exchange (FX) gain of N3.29bn for the first nine month of 2024, compared to an FX gain of N3.89 billion in 9M 2023. However, in Q3 2024, they reported an FX loss of N393m.

Overall, the business reported N51.77bn in Profit After Tax, up 120.5% y/y. Q/q, PAT was down by 13% to N12.89bn from N14.82bn (Q2 2024).

We maintain a Buy recommendation on Presco with a price target of N571.7/s. Current price is N485.4/s

​

Kindly click on the below link to download the full report.

​Presco 9M 2024 Quick Take.pdf​​​​​​​

​​​​​​​