How Presco Plc Profitability Was Bolstered By Topline & Operating Gains

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Presco Plc published its fourth quarter 2023 unaudited financials, reporting a standalone EPS of N6.95 against loss per share of N2.85 in fourth quarter of 2022, underpinned by impressive revenue growth a decline in operating expenses and substantial gains on biological assets revaluation of N7.32 billion against loss of N895.04 million in fourth quarter of 2022.

For 2023 full year, the EPS was N30.42 against N13.03 in full year 2022, recording an increase of 133.4%.

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In the period under consideration, Presco’s revenue grew by 20.4%, primarily due to (1) the impact of the local currency devaluation on Crude Palm Oil (CPO) prices and (2) a substantial increase in PRESCO’s sales volume in 2023.

On the revenue breakdown, the company recorded expansion in its Sales of crude and refined products and Mill by-products.

Meanwhile, on a quarter-on-quarter basis, revenue declined by 8.8% .The company’s gross margin increased to 54.7% underpinned by the marked topline growth.

They highlight that cost pressures remained intact as the cost of sales was up by +13.6%, stemming from higher energy costs in the period.

Consequently, EBITDA and EBIT margins rose to 57.3% and 53.3%, respectively, amid substantial gains on biological revaluation and a 35.9% decrease in operating expenses.

Further down, net finance costs declined by 5.5% to N2.35 billion against N2.48 billion in 2022, following a 7.1% decline in finance cost.

For 2023 full year, PRESCO’s debt profile increased by 6.4% to N67.77 billion against N63.68 billion j 2022.

Overall, the company recorded a profit before tax of NGN11.67 billion in against a loss before tax of N1.50 billion in 2022.

Following a tax expense of N4.73 billion, profit after tax settled at N6.95 billion compared to loss after tax of N2.85 billion in 2022.

Presco, 2023 full year performance was impressive, highlighting the increase in local CPO prices coupled with higher volumes.

Looking ahead to 2024 full year, analyst expect strong expansions in its top and bottom lines underpinned by the impact of the foreign exchange devaluation on CPO prices and enhanced volumes supported by the company’s acquired Siat Nigeria Limited (SNL) estates.

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