Presco Profit Jumps 133% In 2023 On Q4 Asset Revaluation Windfall 

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Presco Plc defied the off-season leanness it expected in the final quarter and lifted profit, a clear 133 per cent to N30.4 billion at the end of 2023 operations – about N6 billion ahead of its full-year target.

 

The final quarter delivered almost N7 billion to the bottom line – seven times the company’s forecast of N1 billion for the quarter.

 

The unusual performance by the oil palm and rubber producing company in its offseason is propelled mostly by over N7 billion windfall from biological asset revaluation in the closing quarter.

 

In the preceding year, the company ended with a loss of N2.8 billion in the final quarter, which lowered its full-year profit from N15.9 billion in the third quarter to close to N13 billion, a drop also from over N19 billion profit in 2021.

 

The company’s full-year financial report yet to be audited shows that much better than expected sales revenue for the final quarter also provided the strength for the enhanced profit delivery for the period.

 

The company had expected a turnover of N17.7 billion for the closing quarter, down from about N29 billion for the third quarter and from about N22 billion in the same quarter in 2022.

 

Rather than a marked drop, the actual sales figure is more than N26 billion for the final quarter – N8.6 billion ahead of the target.

 

The windfall of N7.3 billion from gains on biological asset revaluation is against losses of N895 million for the same quarter in 2022 – which added to the enhanced sales to drive strong profit performance in the final quarter.

 

Other favourable developments that propelled the impressive profit delivery in the final quarter happened on the side of cost savings.

 

The administrative cost dropped by 37 per cent in the quarter to N6 billion and selling and distribution expenses went down by 14 per cent to N470 billion over the same period. Credit impairment loss of over N137 billion in the same quarter in the prior financial year was completely out of the way in 2023.

 

Production cost for the quarter also moderated at an increase of 13.5 per cent to below N12 billion compared to a much stronger growth of 20.4 per cent in sales revenue for the quarter.

 

On the flip side is an exchange loss of N1.5 billion that occurred in the final quarter from zero level in the same period in 2022.

 

The favourable cost-income combination enabled an increase of 26.7 percent in gross profit for the final quarter to N14.4 billion while operating profit jumped more than 14 times to N14 billion over the same period.

 

Presco’s full-year position shows a group turnover of over N103 billion, beating the full-year forecast of N94.6 billion. The figure is an increase of over 27 per cent from the company’s closing sales revenue of N81 billion in 2022.

 

This is a slowdown from a top record increase of roughly 71 per cent in sales in the preceding financial year.

 

Production cost grew slightly ahead of sales revenue in the year at over 28 per cent to N39.8 billion so gross profit grew slightly below sales at 26.7 per cent to N63 billion – better however than the full-year target of N59.8 billion.

 

Cost savings were extracted from administrative expenses that inched up 3 per cent to less than N21 billion at the end of the year and selling and distribution costs that went down by 13 per cent to under N1.6 billion.

 

Two favourable developments happened on the income side – which are foreign exchange gains of N2.4 billion and gains on biological asset revaluation of N7.3 billion.

 

The cost savings and revenue gains propelled a leap of over 83 per cent in operating profit, amounting to N51.8 billion at the end of the year.

 

Net finance cost closed flat at N8.4 billion in the full year, which is a change of position from the preceding financial year when net finance expenses jumped eight and a half times to about N8.4 billion.

 

The company’s balance sheet borrowings increased from N63.7 billion at the end of 2022 to the region of N68 billion at the end of 2023.

 

Its after-tax profit of N30.4 billion for the 2023 trading is an increase of 133.4 per cent, a recovery and growth from a profit drop of 32.6 per cent in 2022.

 

Net profit margin is up from 16.1 per cent in 2022 to 29.5 per cent at the end of the 2023 operations.

 

Earnings per share stood at N3.04 at the end of the year, rising from N1.30 per share in 2022.

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