Presco Plc Financial Performance for Q2 2024
Presco Plc reported a pre-tax profit of N20.781 billion for Q2 2024, marking a significant 159.77% year-on-year (YoY) increase.
For the first half of 2024, the pre-tax profit reached N50.439 billion, surpassing the full-year pre-tax profit of 2023 by 0.86%.
Key Financial Highlights (Q2 2024 vs Q2 2023):
- Revenue: N45.474 billion (+73.86% YoY)
- Cost of Sales: N13.685 billion (+30.51% YoY)
- Gross Profit: N31.790 billion (+102.86% YoY)
- Administrative Expenses: N7.582 billion (+34.41% YoY)
- Selling & Distribution Expenses: N630 million (+79.68% YoY)
- Exchange Losses: N1.710 billion (+1,127.02% YoY)
- Operating Profit Before Finance Income and Cost: N22.725 billion (+130.43% YoY)
- Finance Cost: N2.139 billion (+14.32% YoY)
- Profit After Tax: N14.82 billion (+189.44% YoY)
- Earnings Per Share: N14.82 (+189.45% YoY)
Commentary
The substantial 159.77% YoY increase in pre-tax profit reflects strong profitability and effective cost management, with revenue growth outpacing the rise in cost of sales. Key performance indicators such as the gross profit margin of 69%, EBITDA margin of 50%, pre-tax margin of 46%, and net profit margin of 33% in Q2 2024 indicate robust operational efficiency and profitability.
Presco Plc’s significant profit margins suggest effective operations, strategic cost control, and a strong market position, likely benefiting from economies of scale, high product demand, and strategic pricing.
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Surpassing the full-year 2023 pre-tax profit within H1 2024 suggests potential for a record-breaking financial year.
However, the company faced a significant exchange loss of N1.7 billion in Q2, a 1,127% YoY increase, reducing the H1 2024 exchange gain to N3.66 billion from N5.4 billion in Q1.
Despite this, the company maintained a healthy interest coverage ratio of 10.63 in Q2 and 12.33 in H1 2024, indicating strong earnings to cover interest expenses.
Stock Performance and Dividend
Presco Plc’s share price rose by 98.5% YtD, ranking it seventh on the NGX for YtD performance, with a dividend yield of 6.87%, the highest in its sector.
With consistent dividend payments over the past five years and H1 2024 profits surpassing the full-year 2023 profit, it is expected that the company will maintain or exceed its 2023 dividend payout.
Conclusion
Presco Plc’s strong performance, reflected in impressive profit margins, robust interest coverage ratios, and significant share price gains, positions it as a strong investment option.
The company’s ability to manage FX volatility and high-interest expenses while achieving substantial earnings growth is likely to attract further investor interest and confidence, enhancing its overall market appeal.
