The national scale long-term and short-term issuer ratings of Presco Plc have been upgraded by GCR Ratings, with a stable outlook.
In a statement by the rating agency, it was disclosed that the long-term issuer rating was moved up to A+(NG) from A-(NG) and the short-term issuer rating was raised to A1(NG) from A2(NG).
Concurrently, GCR has upgraded the national scale long-term issue ratings on each of the company’s N34.5Bn Series 1 Senior Unsecured Bond and N82.9Bn Programme 2 Series 1 Senior Unsecured Bond to A+(NG) from A-(NG) previously, with the outlook on the bonds ratings remaining stable.
Explaining the rationale behind the upgrade, GCR stated Presco has witnessed considerable improvements in its financial profile, with consistent reduction in debt over the past four years, coupled with improvements in earnings and free cash flows over the same period.
“We have maintained the analytical approach as group credit analysis using the consolidated financial statements of SIAT N.V., which owns 60 per cent interest in Presco and wholly owns other subsidiaries.
“The group credit analysis reflects Presco’s sustained position as the largest contributor to SIAT N.V. group earnings, with 72.9 per cent of revenue in financial year 2024 (2023: 60 per cent) following its acquisition of Ghana Palm Oil Development Company Limited (GOPDC),” parts of the statement read.
The group returned to turnover growth in 2024 and half year 2025 (H1 2025), reflecting a combination of factors including volumes growth, increased crude oil processing and refining activity, premium pricing and stability of the Naira in 2025.
Earnings concentration to Nigeria would be further accentuated by the proposed acquisition of Saro Oil Palm Limited (SOP), with future growth to be driven by additional inflows from enlarged mature plantations post consolidation, coupled with planned investments in oil milling and refining.
Earnings margins have also rebounded, with EBITDA margin reaching a high of 32 per cent in 2024, compared to a five-year historical average of 28 per cent.
In addition to the positive effect of the spinoff of loss-making subsidiaries in 2023, the recent earnings improvements reflect higher traded volume of higher margin refined palm oil and other processed palm oil products.
“We expect the sound topline growth of 23 per cent reported in H1 2025 to be largely sustained into the full year especially given the stable Naira, while margins would normalise to the 32 per cent-35 per cent range (management accounts: 68 per cent),” GCR stated.
“We consider the liquidity fundamentals to show signs of stress even though the coverage is relatively strong at 1.5x for the 18-month period to 31 December 2026. Maturing debt obligations and expected capital spending over the outlook period are minimal and could be sufficiently settled with operating cash flows and cash on hand of EUR82 million as of 30 June 2025.
“This notwithstanding, significant outflows are expected in respect of dividend distribution, which is now well above the historical levels.
“This is however balanced against the anticipated proceeds from a rights issue of N250 billion (c.EUR140 million), which will be used to repay portions of outstanding debt and fund the proposed acquisition of SOP and the settlement of outstanding purchase consideration on the acquisition of GOPDC.
“We have, however, haircut the expected proceeds of the rights issue. In addition, given the group’s plan to pursue further acquisitions in Nigeria, liquidity could be pressured if these are funded with large debt issuances,” it disclosed.