Presco records post tax loss of –N196m
Presco Nigeria plc has recorded suppressed performance for the period ended 30th September 2017 as its key performance indices closed on red.
The report released by the Nigerian Stock Exchange (NSE) Wednesday showed no positive index as the result has triggered negative market sentiment expected to run a course in the prevailing fourth quarter expected to end 31st December 2017.
The Presco Q3 2017 results, showed that sales and Profit before tax (PBT) declined by -7 per cent y/y and -94 per cent y/y to N4.1billon and N351million respectively.
The company reported an after-tax loss of –N196million compared with PAT of N3.8billion reported in the corresponding quarter of 2016. Further to the declining nature of the result, Presco’s Q3 sales declined, gross margin contracted by –3,991bps y/y to 55.8 per cent, while net finance costs increased by 168 per cent y/y , while the company reported a –N1.4bn loss on the revaluation of biological assets.
The company’s negative profit and loss lines, was heavy enough to offset a -77 per cent y/y decline in operating expenses and led to the weak bottom line.
The underlying results reveal that Q3 PBT declined by -6% y/y. The company recorded a N3.8bn gain on biological asset revaluation in Q3 2016.
On a sequential basis, sales and PBT declined by 28% q/q and 86% q/q respectively. The post-tax loss compares with a PAT of N1.7bn reported in the preceding quarter.
Although Presco’s Plc operating expenses declined by -76 per cent q/q, but was completely offset by the sales decline, a -1,423bp q/q gross margin contraction, a 66 per cent q/q rise in net finance costs and the loss on biological assets revaluation, leading to the PBT decline.
On a 9M basis, sales advanced by 42% y/y to N16.9bn. PBT and PAT declined by -18% y/y and -21% y/y to N7.9bn and N5.4bn respectively, due to a -457bp y/y contraction in gross margin and rises of 19% y/y and 50% y/y in operating expenses and net finance costs respectively.
The decline in sales surprised negatively because we had held the opinion that local palm oil producers are in an advantageous position relative to importers (competitors) due to CBN policies which have encouraged local production and also translated to favorable pricing locally.
On an annualized basis, Presco’s 9M PBT of N7.9bn tracks well behind consensus’ 2017 PBT forecast of N14.8bn. Year-to-date, Presco shares have gained 74.1%, outperforming the NSEASI which has gained 37.3%.
Stories by Bonny Amadi
