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Business News

Cutix Q1 profit slumps amid rising input costs and mounting finance costs 

Cutix Plc, a leading manufacturer of electric cables, has released its Q1 2026 financial results for the period ended July 31, 2025, posting a pre-tax profit of N84 million.

This represents an 81% YoY decline, driven by slower revenue growth, rising raw material costs, and higher interest expenses.

Revenue from cable sales, the company’s main income source, declined by 7.40% to N3.282 billion.

At the same time, the cost of raw materials rose by about 7% YoY, pushing the cost of sales to N2.898 billion in Q1.

This led to a gross margin compression of over 21%, dropping to 18%.

Although administrative and distribution expenses declined, the savings were insufficient to offset the revenue shortfall and rising input costs. As a result, operating profit fell by 35% YoY to N276 million, just 18% of FY 2025’s full-year profit, reducing the operating margin to 8%.

Finance costs continued to mount, reaching N191 million, up from N73 million in the prior year and already 43% of last year’s full finance costs. This spike, driven by interest on term loans, commercial papers, and overdrafts, reduced the interest coverage ratio sharply to 1.44x from 5.79x a year earlier.

Consequently, net profit declined by 81% to N57 million, representing just 6% of the prior year’s full profit.

On the balance sheet side, total assets rose to N10.677 billion, reflecting a 33.56% YoY growth, driven largely by current assets, which make up over 57% of the asset base.

As of market close on August 29, 2025, shares of the company were priced at N3.50, reflecting a year-to-date gain of 52.2%.

On the topline, revenue contraction and escalating input costs weighed heavily on margins, with operating and pre-tax profitability falling

On the balance sheet, asset growth was largely tied to inventories and receivables, which raises concerns about liquidity and working capital efficiency.

For investors, the 52% YtD share price rally reflects optimism about Cutix’s positioning in Nigeria’s cable industry.

However, the fundamentals suggest rising risks: unless receivables are collected faster, inventory turnover improves, and debt costs are contained, profitability and dividend payments may be muted for the current financial year.

Notably, the company has declared a final dividend of 10 kobo per share for the 2025 financial year, scheduled to be paid on September 2, 2025.