Homegrown cable manufacturer, Cutix Plc, reported a net loss of N48 million for the full year, its first in many years, due to operating pressure and a final-quarter loss.
Analysis of the company’s earnings performance at the end of its third quarter operations last January had sounded a warning that “to be able to avert another loss in the final quarter given the cost-income imbalance so far appears to be a tall order for the company”.
The company’s unaudited financial report for the year ended April 2026 shows that the highlighted risk has crystallised. The company recorded a loss of N118 million in the final quarter, slightly higher than the N116 million loss reported in the third quarter.
The losses consumed more than the entire profit of N185.5 million the company reported at the end of half-year operations and yet left a net loss of about N48 million for shareholders.
The final-quarter loss reflects both cost increases that eroded earnings and revenue disappointments during the period. While sales revenue went down year-on-year in the quarter from almost N4 billion to N3.8 billion, three major cost increases were recorded over the period.
The reduced sales were obtained with increased selling and distribution costs, which doubled to nearly N172 million year-on-year. Also, administrative expenses rose by 62 per cent to over N618 million during the same period.
The two cost increases changed the company’s earnings reading for the fourth quarter from an increase in gross profit to a sharp drop in operating profit. While gross profit increased by about 30 per cent year-on-year to N964 million, operating profit for the quarter fell by 37 per cent to N174 million.
A complete loss of other income that contributed over N59 million to the revenue basket in the same quarter in the preceding financial year also added to the operating pressure during the final quarter.
The third cost increase came from finance expenses, which towered above the depreciated operating profit. Cost of finance for the final quarter multiplied close to two and half times year-on-year to stand at N292 million – about 168 percent of the operating profit thus creating a pre-tax loss of N118 million for the quarter.
Despite the loss incurred in the final quarter, some progress was made in strengthening cash flow position during the period, which enabled a significant shading of the company’s debt burden.
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Cash generating capacity of the company improved significantly in the final quarter, turning around from net cash of N54.5 million used in operating activities at the end of the third quarter to net cash of N642 million generated from operating activities at full year.
That remains a considerable loss of internal financing capacity compared to the preceding financial year when the company generated net cash of almost N1.7 billion from operating activities. The improvement was nevertheless good enough to stem the pressure for mounting company borrowings.
The company’s management has slashed balance sheet borrowings from over N4 billion at the end of the company’s third quarter operations to less than N2.8 billion at the end of the year.
Despite the reduction, debt burden weighed heavily on the company during the year under review with finance expenses multiplying more than two and half times to stand in excess of N1 billion.
The company’s full year earnings reading shows operating pressure from the top to the bottom lines in the 2025/26 financial year. Turnover went down by 6.4 percent to N14.8 billion, resulting in a drop of 10 percent in gross profit to N2.9 billion for the year.
Increases in operating expenses caused a more rapid drop in operating profit from almost N1.6 billion in the previous financial year to N930 million. Selling and distribution expenses grew by 73 percent to N451 million, and administrative cost also increased by 8 percent to N1.5 billion.
The entire operating profit was insufficient to meet finance expenses, leading to a pre-tax loss of about N48 million for Cutix Plc for the year. The company’s pre-tax profit had dropped from N1.27 billion to N69 million at the end of the third quarter, which worsened with the loss position at full year.
A direct effect of the loss is declining shareholders’ funds, which have dropped from N4.2 billion at the end of the previous financial year to N3.5 billion at the end of the 2026 financial year.
Retained earnings of about N1.4 billion at the end of the previous year were completely lost in the 2026 financial year and in its place a retained deficit of N26 million has appeared.
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