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Presco Plc reports a standalone EPS of NGN6.95

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Presco Plc (PRESCO) published its Q4-23 unaudited financials yesterday (30 January), reporting a standalone EPS of NGN6.95 (vs loss per share of NGN2.85 in Q4-22), underpinned by impressive revenue growth (+20.4% y/y), a decline in operating expenses (-35.9% y/y) and substantial gains on biological assets revaluation (NGN7.32 billion vs loss of NGN895.04 million in Q4-22). For 2023FY, the EPS printed NGN30.42 (2022FY: NGN13.03), recording an increase of 133.4%.

In Q4-23, PRESCO’s revenue grew by 20.4% y/y (2023FY: +27.3% y/y), 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 (+27.3% y/y) and Mill by-products (+593.2% y/y). Meanwhile, on a quarter-on-quarter basis, revenue declined by 8.8% (Q3-23: +10.1% q/q).

The company’s gross margin (+273bps y/y) increased to 54.7% in Q4-23 (Q4-22: 51.9% y/y) underpinned by the marked topline growth. We highlight that cost pressures remained intact as the cost of sales was up by +13.6% y/y, stemming from higher energy costs in the period. Consequently, EBITDA (+47.18ppts y/y) and EBIT (+48.93ppts y/y) margins rose to 57.3% and 53.3%, respectively, amid substantial gains on biological asset revaluation (NGN7.32 billion vs loss of NGN895.04 million in Q4-22) and a 35.9% y/y decrease in operating expenses.

Further down, net finance costs declined by 5.5% y/y to NGN2.35 billion (Q4-22: NGN2.48 billion) following a 7.1% y/y decline in finance cost. For 2023FY, PRESCO’s debt profile increased by 6.4% y/y to NGN67.77 billion (2022FY: NGN63.68 billion).

Overall, the company recorded a profit before tax of NGN11.67 billion in Q4-23 (vs a loss before tax of NGN1.50 billion in Q4-22). Following a tax expense of NGN4.73 billion, profit after tax settled at NGN6.95 billion (vs loss after tax of NGN2.85 billion in Q4-22).

Analysts at Cordros Capital say PRESCO’s 2023FY performance was impressive, highlighting the increase in local CPO prices coupled with higher volumes. Looking ahead to 2024FY, we expect strong expansions in its top and bottom lines underpinned by the impact of the FX devaluation on CPO prices and enhanced volumes supported by the company’s acquired Siat Nigeria Limited (SNL) estates.

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