Revenue gains, cost saving propel Presco’s N24bn profit in Q1

Presco Plc is going strong on earnings performance for the second year with profit up by 141 percent to N24 billion in the first quarter (Q1). This follows an impressive growth of 152 percent in the bottom line to N32.4 billion at the end of 2023.

Earnings fundamentals are significantly improved on both sides of accelerating revenue and moderating cost – which has stretched out margins.

The favourable combination is the critical force in the oil palm and rubber-producing company’s operations so far this year that has delivered over 74 percent of last year’s closing profit in Q1.

The company’s Q1 financial report for the three months ended March 2024 shows that it converted 56.4 kobo of the naira of sales revenue into net profit, rising from 45.4 kobo in the same period last year and 32.1 kobo at the end of the 2023 full year.

Last year Presco rebounded from a profit drop in the preceding financial year with the upturn driven by a windfall of N12.2 billion from biological asset revaluation gain and net foreign exchange gains of N4.4 billion.

The foreign exchange (FX) gains of last year have already been exceeded at N5.4 billion in Q1, reinforcing the quite improved earnings fundamentals the company registered in the quarter.

Presco has gained much speed on revenue growth with group turnover racing up from 27 percent growth to N102.4 billion at the end of 2023 to 94.1 percent advance to close at N42.5 billion for the first quarter.

Production cost moderated relative to sales at an increase of 53.5 percent to N8.7 billion in the first quarter so that gross profit rose ahead of sales at 108.4 percent to stand at N33.8 billion at the end of the period.

Further cost savings were extracted from administrative expenses, which grew by 86.8 percent to N7.6 billion as well as selling and distribution cost that went up by 70.6 percent to N520 million.

Further strengthening the income side is other operating income, which jumped by 190.5 percent to about N675 million.

The cost savings and revenue gains propelled an outstanding growth of 110.7 percent in operating profit, amounting to N31.8 billion at the end of Q1.

Significant cost saving was also extracted from finance expenses – which increased by 4.2 percent to N2.3 billion.

The company’s balance sheet borrowings are slightly reduced from N68 billion at the end of 2023 to stand at N66.2 billion at the end of the quarter.

An after-tax profit of N24 billion for the first quarter is an increase of 141.5 percent year-on-year.