…PBT fell marginally by 0.5% y/y to N52.98 billion
…PAT down by 19.8% y/y to N33.02 billion after accounting for a tax charge of N19.96 billion
THUR JULY 30 2026-theGBJournal| Presco Plc on Wednesday reported weaker second-quarter earnings, with profit declining as softer crude palm oil prices and a sharp increase in depreciation costs eroded margins despite resilient demand in its Nigerian market.
The palm oil producer posted an unaudited standalone earnings per share of N28.00 for the three months ended June, down 31.7% from N41.00 a year earlier, as revenue fell 6.7% and gross margin narrowed by 686 basis points to 76.1%.
The weaker quarterly performance dragged first-half EPS down 20.2% year-on-year to N71.00, compared with N89.00 in the corresponding period of 2025.
The board declared an interim dividend of N10.00 per share, implying a modest dividend yield of about 0.5% based on the stock’s last closing price of N2,070.00, signalling management’s confidence in cash generation despite the earnings slowdown.
Second-quarter revenue declined 6.7% year-on-year, while first-half revenue was broadly flat, as weaker realised crude palm oil prices weighed on sales from the group’s core crude and refined palm oil business.
The pricing weakness offset continued volume resilience in Nigeria.
Regionally, Nigeria remained the key growth engine, with revenue rising 11.6% in the quarter and 12.4% in the first half.
However, that strength was more than offset by a sharp contraction in Ghana, where revenue fell 46.6% in the second quarter and 34.7% over the first six months of the year.
Profitability came under additional pressure as cost inflation outpaced sales.
Gross margin fell to 76.1% from 82.9% a year earlier after cost of sales rose 30.9%, driven primarily by a more than fivefold increase in depreciation charges on property, plant and equipment.
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: N7.48 billion), reflecting a 35.9% y/y decline in interest on loans and 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 N4.26 billion.
Overall, PBT declined marginally by 0.5% y/y to N52.98 billion in Q2-26, while PAT declined by 19.8% y/y to N33.02 billion after accounting for a tax charge of N19.96 billion (+64.9% y/y).
In H1-26, PBT increased by 9.3% y/y to N122.22 billion, while PAT declined by 7.3% y/y to N82.27 billion.
Lower production costs and reduced repair and maintenance expenses provided only partial relief, underscoring how rising fixed costs amplified the impact of weaker selling prices.
The results suggest Presco’s earnings remain highly sensitive to movements in global palm oil prices, while the sharp increase in depreciation reflects a higher asset base that could continue to weigh on margins in the near term even as it supports future production capacity.
The sustainability of earnings recovery will likely depend on a rebound in crude palm oil prices and the company’s ability to preserve margins amid elevated operating costs.
Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
