July 29, 2026/Cordros Report
Presco Plc (PRESCO) released its unaudited financial statements for Q2-26 today, reporting a 31.7% y/y decline in standalone EPS to NGN28.00 (Q2-25: NGN41.00). The weak earnings performance was primarily driven by lower revenue (-6.7% y/y) and gross margin compression (-686bps y/y to 76.1%). Consequently, H1-26 EPS declined by 20.2% y/y to NGN71.00 (H1-25: NGN89.00). The Board declared an interim dividend of NGN10.00, implying a dividend yield of 0.5% based on the last closing price of NGN2,070.00.
Revenue declined by 6.7% y/y in Q2-26 (H1-26: +0.0% y/y), reflecting weaker sales across the Group’s core crude and refined products business (-6.8% y/y). We attribute the decline primarily to weaker realized crude palm oil (CPO) prices during the period. Across operating regions, revenue increased in the Nigerian market (+11.6% y/y | H1-26: +12.4% y/y), while revenue from Ghana declined sharply by 46.6% y/y (H1-26: -34.7% y/y).
Gross margin contracted by 686bps y/y to 76.1% in Q2-26 (H1-26: -86bps y/y to 83.4%), reflecting an increase in cost of sales (+30.9% y/y) despite lower revenue. The increase in cost of sales was largely driven by higher depreciation charges on property, plant and equipment (+500.1% y/y), which more than offset the moderation in production costs (-2.9% y/y) and lower repairs & maintenance expenses (-50.0% y/y).
Meanwhile, EBITDA margin expanded by 118bps y/y to 59.2% (H1-26: +11bps y/y to 66.8%), reflecting lower production and maintenance costs during the period. Conversely, EBIT margin contracted by 184bps y/y to 56.0%, reflecting the combined impact of lower revenue, higher cost of sales and a 9.8% y/y increase in operating expenses. Operating expense growth was driven by higher selling and distribution costs (+98.1% y/y), largely reflecting increased transportation costs, alongside higher administrative expenses (+4.6% y/y) due to rising staff costs.
Further down, net finance costs declined sharply by 75.1% y/y to NGN1.86 billion in Q2-26 (Q2-25: NGN7.48 billion), reflecting a 35.9% y/y decline in interest on loans & overdrafts alongside a 160.7% y/y increase in finance income, providing a partial offset to weaker operating performance. In H1-26, net finance costs declined by 76.3% y/y to NGN4.26 billion.
Overall, PBT declined marginally by 0.5% y/y to NGN52.98 billion in Q2-26, while PAT declined by 19.8% y/y to NGN33.02 billion after accounting for a tax charge of NGN19.96 billion (+64.9% y/y). In H1-26, PBT increased by 9.3% y/y to NGN122.22 billion, while PAT declined by 7.3% y/y to NGN82.27 billion.
Comment: PRESCO’s Q2-26 performance reflected the challenging operating environment, with softer crude palm oil prices and elevated operating costs continuing to weigh on profitability. The weaker pricing environment translated into lower revenue, gross margin compression and softer earnings, although significantly lower net finance costs provided a partial offset. Notably, the NGN10.00/share interim dividend is a positive, reflecting continued cash generation and a healthy balance sheet. Looking ahead, we expect earnings to remain under pressure over the remainder of the year amid subdued CPO prices, weakness in the Ghana business and persistent cost pressures. Nevertheless, stronger operations in Nigeria and lower financing costs should provide some support. Our estimates are under review.
