Presco Plc Faces Earnings Pressure Amid Expansion Plans

Presco Plc’s near-term earnings are under pressure due to stagnant revenue growth, higher operating costs, and an increase in shares following a rights issue, according to CardinalStone Research. The research firm revised its 12-month target price for Presco to N2,140.25 and downgraded its recommendation from BUY to HOLD, indicating a 4.64 percent upside from the reference price of N2,045.30.

For H1 2026, Presco reported virtually unchanged revenue at N198.8 billion, despite rising global crude palm oil (CPO) prices. The weak revenue growth was attributed to the Ghanaian segment, where lower fresh fruit bunch yields were caused by delayed seasonal rains.

In Nigeria, smuggling and a reduction in the CPO import tariff capped revenue momentum. Operating expenses rose 11.4 percent year-on-year to N75.8 billion.

CardinalStone expects FY2026 core EBITDA and EBIT margins to decline before recovering in 2027. Presco's balance sheet improved, with total borrowings falling to N119.5 billion.

The company is pursuing expansion plans, including a 22,500-hectare acquisition and a new mill expected to be completed in Q4 2026.