Livestock Feeds Plc has returned to profitability after last year’s losses, though a second consecutive year of declining sales revenue has raised concerns.
The animal feed company’s first-quarter profit surged 19-fold year-on-year to N732 million, despite a N3 billion drop in sales.
The company’s first-quarter financial report for the period ended March 2026 shows sales revenue down from N10.8 billion to N7.6 billion year-on-year.
This is a sustained loss of sales for the second year after the company closed the 2025 operations with turnover down by close to N4 billion to N37.8 billion. Sales declined across all geographic markets due to a soft market and stagnant volume.
In the previous year, the drop in sales resulted in a net loss of roughly N3 billion, the third loss in five years. This year, however, the company’s management isn’t letting the loss of sales get down to the bottom line.
How to build profit from falling sales seems to be the summary of Livestock Feeds earnings story in the current financial year. The company implemented cost-saving measures that absorbed all the revenue losses and grew profit at every stage of the operational flow.
Management significantly cut the cost of sales by 36 per cent (N3.3 billion) to N5.9 billion, which more than offset a N3.2 billion drop in sales revenue, increasing gross profit.
Gross profit therefore increased from N1.5 billion to N1.7 billion over the period, reversing last year’s situation when input costs edged up against a drop in sales.
Operating activities added to the cost savings with a drop in administrative expenses and a slow growth in selling and distribution cost. The result is an increase of 15 per cent in operating profit from a little above N1 billion to N1.2 billion over the period.
The third level of cost savings was from financing activities, with a major reduction in cost of finance, lowering net finance expenses from over N1 billion to N378 million over the period.
This marked the turning point for the company in the first quarter, with pre-tax profit advancing from only N57 million in the same period last year to the region of N857 million in the first quarter of 2026.
After-tax profit similarly multiplied from N38 million to about N732 million over the same period.
The profit figure, however, easily sinks into a pool of accumulated losses that was as deep as N1.8 billion at the end of the 2025 financial year.
That had wiped off a good part of the company’s equity base of N3.4 billion at the end of 2024 and left a piddling N388 million as shareholders’ funds at the close of the 2025 financial year.
The return to profit in the first quarter has registered some progress in rebuilding equity capital. Accumulated losses have dropped to N1 billion, and equity base has upturned to N1.1 billion.
Sustained profit deliveries over the next two quarters might see the company through to a return to retained earnings numbers.
Apart from lease liabilities totalling N314 million, the company has no interest-bearing financial liabilities, which indicates that the drop in finance expenses – the main driver of turnaround can be sustained.
Nevertheless, the inability to stem loss of sales for the second year leaves a big room for uncertainty in earnings performance in the coming quarters. Should cost-cutting fail in the face of revenue losses, the loss can be sure to be big.
Livestock Feeds closed the first quarter operations with earnings per share of 24 kobo, a big surge forward from 1 kobo per share in the same quarter in 2025.
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