October 30, 2026/Cordros Report
Presco Plc (PRESCO) published its Q3-26 unaudited financial statements this morning, reporting a 12.6% y/y increase in EPS to NGN24.77 (+12.6% y/y), bringing 9M-26 EPS to NGN95.29 (-14.0% y/y). Earnings growth in Q3-26 was primarily driven by an 82.9% y/y reduction in net finance costs, which more than offset the weaker operating performance. Notably, this came despite a 950bps y/y expansion in gross margin, as a sharp 757.5% y/y increase in operating expenses weighed on operating profitability.
Revenue grew by 2.7% y/y to NGN77.79 billion in Q3-26 (9M-26: +0.7% y/y to NGN276.54 billion), supported by resilient domestic demand. By geography, Nigeria revenue rose by 13.4% y/y to NGN57.39 billion (9M-26: +12.7% y/y to NGN222.02 billion), while Ghana (GOPDC) revenue grew by 18.4% y/y to NGN20.41 billion (9M-26: -21.6% y/y to NGN54.53 billion, as the H1 currency-translation drag eased in Q3). Notably, double-digit growth across both core markets was masked at the group level by the absence of German export sales (Q3-25: NGN7.91 billion; nil in Q3-26). Sequentially, revenue declined by 20.5% (Q2-26: NGN97.89 billion), reflecting seasonal patterns.
Gross margin expanded by 950bps y/y to 47.6% in Q3-26 (9M-26: -21bps y/y to 73.3%), as the cost of sales declined by 13.1% y/y to NGN40.79 billion (9M-26: +1.5% y/y to NGN73.72 billion), offsetting the weak topline momentum. The decline in cost of sales reflects a sharp 72.3% y/y reduction in raw materials consumed to NGN1.89 billion.
PRESCO’s EBIT and EBITDA margins contracted by 812bps and 629bps y/y to 39.4% and 44.2%, respectively, amid a 757.5% y/y surge in operating expenses. However, the sharp increase largely reflects an abnormally low Q3-25 base, when administrative expenses included a one-off credit. On a 9M basis, operating expenses rose a more representative 20.3% y/y. Additionally, a significant reduction in exchange gains to NGN81.34 million from NGN5.98 billion in Q3-25 further weighed on operating performance.
Below the operating line, PRESCO recorded an 82.9% y/y decline in net finance costs to NGN1.43 billion in Q3-26 (9M-26: -78.4% y/y to NGN5.68 billion), driven by a 39.2% y/y reduction in finance costs and a 134.1% y/y surge in finance income. The reduction in finance costs was driven by 39.2% y/y decline in interest on loan and overdraft (9M-26: -34.5% y/y to NGN19.65 billion), while an 86.6% y/y increase in interest income on fixed deposit (9M-26: +235.9% y/y to NGN12.96 billion) drove the surge in finance income, alongside NGN1.00 billion in loan income recorded during the period.
Overall, profit before tax (PBT) increased by 5.7% y/y to NGN29.26 billion in Q3-26 (9M-26: +8.5% y/y to NGN151.48 billion), while profit after tax (PAT) grew by 31.8% y/y to NGN28.90 billion (Q3-25: NGN21.94 billion), aided by a sharply lower tax charge of NGN0.36 billion (Q3-25: NGN5.74 billion; effective rate: 1.2% vs 20.7%). On a 9M basis, PAT was broadly flat at NGN111.18 billion (9M-25: NGN110.79 billion), as a higher effective tax rate of 26.6% (9M-25: 20.7%) offset the PBT growth.
Comment: PRESCO’s earnings growth was primarily supported by lower net finance costs, as a sharp increase in operating expenses more than offset the benefits of gross margin expansion. Looking ahead, a meaningful recovery in volumes across key markets, particularly Nigeria and Ghana, alongside sustained cost discipline, will be critical to restoring operating profitability. Meanwhile, lower borrowing requirements and a more favourable interest rate environment could provide further support to net finance costs. However, elevated operating expenses, softer CPO realisations amid naira appreciation and continued foreign exchange translation pressures on Ghanaian operations remain key downside risks. Our estimates are under review.
