Julius Berger Nigeria Plc, in its recently released financial results, reveals a noticeable gap between its profit figures and underlying cash generation, as the construction giant recorded a sharp drop in net cash from operating activities, raising questions over the sustainability of its earnings.
For the half-year ended June 30, 2025, the company posted a profit after tax of N7.1 billion, a 39 percent decline from the N11.6 billion recorded in the same period of 2024. However, beneath the headline profit, the company’s core cash flow tells a more pressing story.
Net cash used in operating activities stood at a negative N63.8 billion, more than double the N27.9 billion outflow recorded in the corresponding period last year
This shortfall was driven by a significant mismatch between cash receipts and cash outflows. While customer receipts climbed to N270.4 billion from N251.9 billion, cash paid to suppliers and employees surged to N329.7 billion from N276.7 billion, eroding liquidity despite higher revenue.
The gap between reported profits and operational cash flow suggests that a large portion of Julius Berger’s earnings remains tied up in receivables, uncollected contract payments, or higher project-related costs.
Although the group booked N343.4 billion in revenue, up 41 percent year-on-year, its cost of sales and administrative expenses expanded at a faster pace to N283 billion and N43 billion, respectively. While contract liabilities and receivables continued to grow, the tightening of cash availability tightened.
The company partially offset weak operating cash flow through N6.6 billion in interest income and N3.7 billion from the disposal of property, plant, and equipment. Yet these inflows stem from investing activities, not core operations, raising questions about their sustainability as a recurring support for liquidity.
The implication for profitability is twofold. First, without a turnaround in operating cash generation, Julius Berger may have to lean more heavily on asset disposals, external financing, or delayed payments to contractors, which could pressure margins. Second, continued cash strain could hinder the company’s ability to fund new projects, pay dividends, or navigate cost shocks in Nigeria’s volatile construction environment.
In the short term, the company’s N95.1 billion cash balance offers some cushion. But with operating activities consistently draining liquidity, the risk remains that profitability on paper may not translate into distributable cash, potentially tempering investor confidence if working capital efficiency does not improve.
Further analysis disclosed that total assets rose to N1.047 trillion at the end of June 2025, up 3 percent from N1.023 trillion at the close of 2024, driven mainly by higher trade receivables and contract assets, which together make up more than 23 percent of total assets
Non-current assets stood at N489.7 billion, with property, plant, and equipment alone accounting for N278 billion, underscoring the capital-intensive nature of the construction business. Current assets came in at N556.3 billion, with cash and bank balances at N101.4 billion, down sharply from N162.4 billion at the start of the year, reflecting heavy cash outflows from operations.
On the liabilities side, total obligations climbed to N683.2 billion from N677.3 billion in December. Contract liabilities, which represent advance payments from customers, made up the bulk of this figure at N474.8 billion, signalling a healthy pipeline of projects but also locking up funds until work milestones are met. Trade and other payables amounted to N83.6 billion, indicating ongoing pressure from suppliers and subcontractors.
The company’s equity position remains solid, surging to N363.9 billion from N345.8 billion at the start of the year, aided by retained earnings growth and other reserves, including a revaluation surplus of N183.5 billion. This has helped keep Julius Berger’s debt profile light, with no borrowings recorded as of June, down from N2.6 billion in the same period last year.
