May 2, 2025/Cordros Report
Presco Plc (PRESCO) published their Q1-25 unaudited financial results after close of business on Wednesday (30 April), reporting a standalone EPS of NGN47.58 in Q1-25 (Q1-24: NGN24.06). This strong earnings performance was primarily driven by exceptional topline growth (+120.4% y/y).
PRESCO’s revenue rose by 120.4% y/y in Q1-25, supported by (1) higher production volumes and (2) elevated global crude palm oil (CPO) prices. Notably, the average CIF Rotterdam CPO price increased to USD1,050.45/mt in Q1-25 from USD846.59/mt in Q1-24, buoyed by export constraints and production shortfalls in key producing countries – Indonesia and Malaysia. According to management, this performance reflects Presco’s strong production output, operational discipline, and sustained focus on efficiency and value creation. Additionally, the topline was bolstered by the consolidation of Ghana Oil Palm Development Company (GOPDC). The Ghanaian subsidiary contributed NGN19.28 billion to revenue in the quarter, reflecting increased scale and USD/EUR-denominated export earnings, which also helped cushion FX pressures.
Gross margin (+12.40ppts y/y) expanded to 91.8% in Q1-25 (Q1-24: 79.4%), as the cost of sales declined by 12.5% y/y amid the substantial revenue growth. The decline in cost of sales was largely attributable to lower production costs (-62.2% y/y) in the period. Nonetheless, EBITDA (-88bps y/y) and EBIT (-98bps y/y) margins declined to 76.3% and 73.7%, respectively, due to a sharp increase in operating expenses (+120.0% y/y).
Net finance costs surged by 400.2% y/y to NGN10.47 billion (Q1-24: NGN2.09 billion), driven by a 361.9% y/y increase in finance costs, primarily on the back of higher interest expenses (+421.9% y/y). Total debt reported was NGN161.67 billion as of Q1-25, vs the NGN62.23 billion reported as of 2024FY.
Overall, PBT rose by 97.6% y/y to NGN58.61 billion in Q1-25 (Q1-24: NGN29.66 billion). After accounting for a tax expense of NGN11.03 billion (Q1-24: NGN29.66 billion), PAT settled at NGN47.58 billion (Q1-24: NGN24.06 billion).
Comment: PRESCO’S Q1-25 was impressive, underpinned by favourable pricing dynamics and stronger production output. Looking ahead, we anticipate a sustenance of current performance, highlighting still robust topline performance, alongside operational efficiency limiting cost pressures. Our estimates are under review.
