Nigerian billionaire Rasheed Sarumi's Presco sees profit falls 20% to $23.8 million in second quarter

Presco, the Nigerian palm oil producer controlled by billionaire Rasheed Sarumi through Saroafrica, reported a 20% fall in second-quarter profit as revenue declined and a larger share count cut earnings per share by almost a third.

Net income for the three months to June 30 came in at ₦33.02 billion, about $23.8 million, against ₦41.14 billion a year earlier. Revenue fell to ₦97.89 billion from ₦104.95 billion. Earnings per share dropped to ₦28 from ₦41, a decline of 31.7%.

The half-year picture is flatter but not better. Revenue of ₦198.75 billion was effectively unchanged from ₦198.74 billion. Net income fell 7.3% to ₦82.27 billion, roughly $59.2 million, from ₦88.72 billion. Earnings per share fell 20.5% to ₦70.52 from ₦88.72.

The gap between those two declines is the most revealing figure in the release. Profit fell 7.3% while per-share earnings fell 20.5%, which can only happen if the company has issued shares.

Working the count back from reported earnings, Presco had precisely 1.000 billion shares in issue a year ago and has roughly 1.166 billion now, an increase of about 17%, by Billionaires.Africa's calculation. The company has not drawn attention to the issuance in its results summary.

That expansion has a direct consequence for the register. SIAT, the Belgian agro-industrial group, holds 520,200,000 Presco shares, which represented 52% of the company on the smaller count and closer to 45% on the enlarged one, unless the block subscribed to new shares. Saroafrica International acquired 86.7% of SIAT in March 2024, giving Sarumi control of the position by look-through.

On that basis his effective interest runs to about 451 million shares, worth roughly ₦933.6 billion, or about $671.7 million, at Wednesday's close.

The quarterly deterioration was concentrated in the three months to June. Implied first-quarter profit was around ₦49.26 billion against ₦47.58 billion a year earlier, a modest increase, meaning the entire half-year shortfall arrived in the second quarter.

Investors moved before the numbers landed. Presco closed at ₦2,070 on Wednesday, down 10% over five sessions, though still up 42.76% since the start of the year. The stock carries a market value of roughly ₦2.41 trillion, about $1.74 billion. Two analysts cover it, with an average target price of ₦2,522.36, implying 21.85% upside.

Presco is among the most concentrated businesses on the Nigerian Exchange. Crude and refined palm oil account for 99.9% of sales, with fresh palm fruit making up the remainder, and every naira of revenue is earned in Nigeria. The company employs 1,737 people.

That concentration cuts both ways. It gave Presco enormous leverage to Nigerian palm oil prices through two years of currency devaluation and food inflation, and it leaves the company exposed when those prices turn. Revenue held flat across the half while costs did not, which is what a margin squeeze looks like before management explains it.

The group has continued to buy. It acquired Saint Nigeria Limited for ₦71.1 million in April, a small transaction alongside the plantation and mill expansion Saroafrica has pursued since taking control of SIAT.

Sarumi built Saroafrica from agricultural inputs and crop protection into a group spanning farming, oil palm, food and lubricants, and the SIAT purchase gave him the largest single position in Nigerian palm oil. Presco and Okomu Oil Palm dominate the listed sector between them.

Neither Presco nor Saroafrica has commented on the second-quarter figures, and the company has issued no guidance for the second half.