July 30, 2025/Cordros Report
Presco Plc (PRESCO) released its unaudited financial statements for Q2-25 this morning (30 July), reporting a strong standalone EPS of NGN41.14, significantly higher than NGN14.82 recorded in Q2-24. This robust earnings performance was primarily underpinned by an exceptional topline expansion, with revenue growing by 130.8% y/y during the quarter. Consequently, the company’s H1-25 EPS surged to NGN88.72 (H1-24: NGN38.88). The Board declared an interim dividend of NGN20.00 for every ordinary share of 50 kobo each (Qualification date: Friday 7 November 2025).
Revenue rose by 130.8% y/y in Q2-25 (H1-25: +125.8% y/y), driven by (1) increased production volumes and (2) higher global crude palm oil (CPO) prices, as reflected in the Q2-25 CIF Rotterdam average of USD940.21/mt (vs. USD841.30/mt in Q2-24). A breakdown of the topline shows that the surge in revenue was primarily driven by the sales of crude and refined products segment (+130.8% y/y).
On a quarter-on-quarter basis, total revenue grew by 11.9%, supported by a 72.1% q/q increase in revenue from Ghana to NGN33.01 billion (Q1-25: NGN19.28 billion). Conversely, revenue from Nigeria declined by 3.4% q/q to NGN71.94 billion (Q1-25: NGN74.51 billion), reflecting a slight dip in domestic sales volumes, likely due to intensifying competition from imported alternatives, amid improved naira stability; and potential inventory drawdowns following the strong Q1-25 performance.
Gross margin (+13.10ppts y/y) expanded to 83.0% in Q2-25 (Q2-24: 69.9%), reflecting a slower increase in cost of sales (+30.4% y/y) compared to revenue growth. The rise in cost of sales was primarily driven by a sharp surge in the cost of raw materials consumed (+19.6x y/y), alongside higher depreciation charges on property, plant and equipment (+18.9% y/y) and a substantial increase in repairs and maintenance expenses (+268.8% y/y), despite a 4.3% y/y decline in overall production costs. Thus, EBITDA (+10.42ppts y/y) and EBIT (+789bps y/y) margins expanded to 58.0% and 57.9%, respectively, despite a 200.3% y/y uptick in operating expenses. The increased OPEX is linked to higher administrative expenses (+207.2% y/y) and selling and distribution expenses (+117.1% y/y).
Net finance costs rose sharply by 284.7% y/y to NGN7.48 billion in Q2-25 (Q2-24: NGN1.94 billion), primarily due to a 319.3% y/y surge in finance costs, driven largely by a significant increase in interest payments on loans (+392.5% y/y). This was further compounded by lease-related interest expenses amounting to NGN85.23 million during the period. In contrast, interest on overdrafts declined markedly by 96.2% y/y.
Overall, PBT rose by 156.2% y/y to NGN53.25 billion in Q2-25 (Q2-24: NGN20.78 billion). After accounting for a tax expense of NGN12.10 billion (Q2-24: NGN5.96 billion), PAT settled at NGN41.14 billion (Q2-24: NGN14.82 billion).
Comment: PRESCO delivered an impressive Q2-25 performance, underpinned by strong topline growth on the back of higher production volumes and favourable CPO prices. Looking ahead, we expect the company to sustain its earnings momentum through H2-25, supported by elevated domestic pricing, ongoing cost efficiencies, and a relatively stable exchange rate environment, which should help limit forex-related losses. Nonetheless, we flag potential downside risks from a softening in global CPO prices, amid improving supply conditions in Southeast Asia and weak global demand, which could weigh on revenue growth. Our estimates are under review.
