Presco Plc, one of the major oil palm producing company released its fourth quarter unaudited financial statements for the period ended December 31, 2022, reporting a standalone Earnings Per Shares (EPS) of NGN3.48 against NGN5.09 in 2021, underpinned by a sharp uptick in net finance cost (+5736.7% y/y).

For 2022 full year, the EPS settled at NGN21.47 (2021FY: NGN19.32), recording an increase of 11.1%. PRESCO’s revenue grew by 218.3% y/y in Q4-22 (2022FY: +75.1% y/y), driven by a sustained increase in Crude Palm Oil (CPO) production volumes. Sequentially, on a quarter-on-quarter basis, revenue grew by 136.3%.

Gross margin contracted by 15.74ppts to 43.6% in Q4-22 (Q4-21: 59.3%), influenced by the significant growth in the cost of sales (+341.5% y/y). We believe that higher diesel prices must have resulted in higher energy costs, which constitute the bulk of PRESCO’s total costs. Consequently, the operating margin declined by 25.56ppts to 22.4% (Q4-21: 48.0%) amid a 348.9% y/y decline in operating expenses.

Net finance rose significantly by 5736.7% y/y to NGN3.98 billion in Q4-22 (Q4-21: NGN72.53 million) on the back of a 5380.6% y/y increase in finance costs.

Overall, profit before tax declined by 14.0% y/y to NGN5.30 billion in Q4-22. Following a tax expense of NGN1.82 billion, profit after tax came in at NGN3.48 billion (Q4-21: NGN5.09 billion) representing a decline of 31.7% y/y.