Presco Plc Q4-24: Increased Revenue and Lower Net Finance Costs Boost Profitability

Photo Credit: Nairametrics

February 3, 2025/Cordros Report

Presco Plc (PRESCO) published its Q4-24 unaudited financials after the close of business on Friday (31 January), reporting a standalone EPS of NGN52.51 in Q4-24 (Q4-23: NGN9.39), underpinned by impressive revenue growth (+172.3% y/y) and lower net finance costs (-28.6% y/y). For 2024FY, the EPS came in at NGN104.28 (2023FY: NGN32.86), recording a substantial increase of 217.3% y/y.

PRESCO’s revenue grew by 172.3% y/y in Q4-24 (2024FY: +93.5% y/y) on account of (1) the effect of naira devaluation on local CPO prices, (2) higher global CPO price (average CIF Rotterdam CPO price: USD1,097.22/mt in Q4-24 vs USD782.08/mt in Q4-23) facilitated by weaker exports and production shortfalls in Indonesia and Malaysia, respectively, and (3) higher volumes in the period. Sequentially, on a q/q basis, turnover grew by 71.6%.

Gross margin (-176bps) declined to 61.2% in Q4-24 (Q4-23: 63.0%) as cost of sales (+185.3% y/y) grew faster than revenue. The significant cost pressures were primarily driven by higher energy and fertilizer expenses in the period. Meanwhile, operating profit settled higher at NGN63.18 million (Q4-23: NGN21.38 million), amid a 38.6% fall in operating expenses.

PRESCO’s net finance charges declined by 28.6% y/y to NGN2.21 billion (vs NGN3.09 billion in Q4-23), driven by a lower interest on lease liabilities. The result shows a 79.0% decrease in the company’s interest on lease liabilities to NGN74.30 million in 2024FY (vs NGN354.65 million in 2023FY).

Overall, PRESCO’s PBT increased by 233.5% y/y to NGN60.97 billion in Q4-24 (Q4-23: NGN18.28 billion). A tax expense of NGN8.45 billion resulted in a PAT of NGN52.51 billion in the period (Q4-23: NGN9.39 billion).

Comment: PRESCO’s performance was impressive, as anticipated, following the impact of naira depreciation on CPO prices, the rally in CPO prices, and increased production volumes. Looking ahead, while we expect the moderation in global CPO prices and a stable FX rate to temper topline growth in the 2025FY, we believe the company’s performance will remain resilient, supported by strong sales and higher production volumes. However, we remain cautious about rising cost pressures, which could weigh on margins. Our estimates are under review.

Leave a Comment

Your email address will not be published. Required fields are marked *

*