Vitafoam Nigeria Reaps Rewards of N7bn Cut in Borrowings

Vitafoam Nigeria Plc is benefiting significantly from a strategic reduction in its borrowings by over N7 billion, resulting in sharply lower finance expenses and stronger profit growth by the end of the third quarter, June 2026.

The foam and furniture manufacturer has bolstered its internal cash generation, allowing it to pay off large amounts of interest-bearing debt.

According to its interim financial report for Q3 2026, Vitafoam reduced its balance sheet borrowings from N9.3 billion at the end of the previous financial year to N2.3 billion at the close of the third quarter, reflecting a robust cash flow position.

Net cash generated from operating activities surged from under N12 billion to over N18 billion year-on-year. Cash and cash equivalents more than doubled year-on-year to over N14 billion, boosting finance income.

At the same time, net cash used for investing and financing activities declined, supporting the third consecutive year of reduced borrowings—down from over N23 billion in 2023.

With steady sales revenue growth and moderating costs, Vitafoam is on track for another strong profit performance in 2026, following a major recovery in 2025 after a profit slump in 2024.

Sales revenue increased by 7.5 per cent to over N91 billion in Q3, while the cost of sales rose just 2.4 per cent to N58 billion.

Gross profit climbed 17.7 per cent to N33 billion, indicating improved margins, while a modest rise in operating expenses allowed the company to preserve most of the cost savings, leading to a 17.2 per cent increase in operating profit, which reached N21.7 billion.

The most notable development is the sharp drop in finance expenses and the rise in finance income, which have further improved profit margins.

Finance costs dropped 72.5 per cent year-on-year to N1.3 billion at the end of Q3, while finance income more than doubled to about N428 million. The third quarter saw the largest fall in finance costs, from N2.2 billion to less than N349 million year-on-year.

Substantial cost savings from lower net finance expenses powered pre-tax profit up by more than 50 per cent, closing Q3 at N20.8 billion. After-tax profit rose 45.5 per cent year-on-year to N13.6 billion.

The outlook for the final quarter is positive, with expectations of even stronger profit growth, in line with the company’s historical earnings pattern. In 2025, the final quarter contributed 35.6 per cent of full-year after-tax profit, which was N14.5 billion.

Buoyed by accelerating sales, robust cash reserves, and reduced debt, Vitafoam is on track to achieve an after-tax profit of N20 billion by September 2026.

Earnings per share stood at N10 at the end of Q3, up from N6.97 in the same period last year.