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Presco Nigeria Plc’s net profit got a boost from income tax credits, which help fend off the effect of a reduction in sale of biological assets.
For the year ended December 2017, Presco’s net income increased by 17.10 percent to N25.40 billion from N21.70 billion as at December 2016; driven by a tax credit of N14.45 billion in the period under review.
Presco Plc, one of Nigeria’s biggest players in the agro industry, suffered a 64.92 percent decline in profit before tax to N10.95 billion in the period under review as against N31.22 billion the previous year.
The precipitous drop in pre-tax profit was due to an 88.88 percent drop in gain on biological assets revaluation to N2.78 billion in the period under review.
Gain on biological assets revaluation had been underpinning the bottom line (profit) of palm oil producers in Africa’s most populous nation. Continuous drop in such an item could undermine future net margin.
Presco couldn’t turn each naira of generated in sales into higher profit as net margin dropped to 113.60 percent to 113.60 percent in December 2017 from 138.83 percent as at December 2016. Pre-margin fell to 49.12 percent in the period under review from 198.72 percent as at December 2016.
The company’s sales were up 42.15 percent to N22.30 billion in the period under review from N15.70 billion as at December 2016. “The main driver for the increased earnings was the substantial increase in sales for 42 per cent from N15.7 billion in 2016 to N22.3 billion in 2017,” Kenneth Crockett, Chief Finance Officer of Presco, told BusinessDay on phone.
Presco Plc has total land bank of 40,000 hectares of which planted areas are 20,136 hectares of oil palm and 138 hectares for rubber.Its investment is valued at N75 billion. Its capacity is 63 percent in the peak season and 24 percent in the lean season. The firm’s estimated production for 2018 is 47,000 MT of CPO.
Industry players has attributed the impressive result to the new measure in controlling the infestation of weed and government policy on reducing importation of vegetable oil products
“I Am aware that Beya brought out a particular bag of chemical used by the company for weed control and the government policy on the reduction of imports of certain items which include vegetable oil has controlled the issue of smuggling of vegetable oil which has helped the company,” Aboidun Olorundenro, Operations Manager, Aquashoots Nigeria said.
As at Monday 16th April, the company’s share price rallied some N70 year-to date , outperforming the NSE All share index with a market capitalization of 70 billion and outstanding shares of one billion.
BUNMI BAILEY
