The share price of Julius Berger Nigeria Plc declined by 13.3 percent year-to-date on Monday, May 19th, following the construction giant’s drop in its first-quarter profit, triggering investor concerns over the company’s earnings outlook amid rising operational pressures.
The company’s Q1 2025 unaudited financial results showed a 64.7 percent drop in profit after tax to N3.5 billion, down from N10.1 billion recorded in the same period last year.
In the first three months, Julius Berger experienced a decline in profit across all major product and service lines.
Specifically, profit from civil works dropped by 82.6 percent to N1.227 billion. In the building works segment, profit decreased by 69 percent, falling to N858 million from N2.75 billion in the same period of 2024. Additionally, profits from services declined by 28 percent, declining to N2.42 billion from N3.38 billion.
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Efforts at diversification took a particular hit as the segment recorded a loss of N1.39 billion. This decline was largely attributed to higher cost of sales and rising finance costs, despite a modest uptick in revenue.
Revenue for the period grew by 62.9 percent year-on-year to N180.5 billion, compared to N110.8 billion in Q1 2024. However, the cost of sales surged by 70.3 percent, eroding gross margins and putting pressure on the bottom line.
BusinessDay analysis shows that the company’s gross margin fell to 15 percent from 18 percent reported in the same period of last year, as its net profit margin fell to 1.9 percent.
The company also cited macroeconomic headwinds, including naira depreciation, elevated inflation, and supply chain disruptions, as key challenges affecting project delivery timelines and input costs.
Investors reacted swiftly to the earnings. Julius Berger’s stock closed at N137 on Monday on the Nigerian Exchange Group (NGX), down from N155.25 at the beginning of the year.
Despite the short-term decline, some investors remain optimistic about the company’s long-term prospects, especially with the federal government’s renewed focus on infrastructure spending under the 2025 budget.
Julius Berger is one of Nigeria’s oldest and most prominent engineering and construction firms, with a portfolio that spans roads, bridges, buildings, and energy infrastructure.
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The company has four core business segments: civil engineering, encompassing infrastructure and related construction projects within Nigeria; building, involving residential, commercial, and industrial building projects within Nigeria; and services provided to third parties in Nigeria and in Europe.
There is also diversification, which comprises the business unit Cashew Processing in Epe, Lagos, and the group expanded its construction business into new regional markets in West Africa.
Julius Berger’s diversification began in 2022 with the commissioning of its cashew processing plant.
It has also undertaken road construction works in Cotonou, Republic of Benin.
As of the end of Q1, Julius Berger’s total assets stood at N1.05 trillion, up from N767 billion in March 2024.
The company’s earnings per share fell to N2.19 from N6.26 during the period surveyed.
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