Cutix Plc, one of Nigeria’s leading cable manufacturers, has reported a sharp drop in profitability in its first-quarter results for the financial year ending July 31, 2025, with pre-tax profit tumbling 81 per cent year on year to ₦84 million.
The steep decline was driven by sluggish revenue growth, higher raw material prices, and mounting interest expenses. Revenue from cable sales, which remains the company’s primary income stream, fell 7.40 per cent to ₦3.282 billion, while raw material costs increased by roughly 7 per cent, pushing cost of sales to ₦2.898 billion for the quarter.
This cost pressure caused gross margins to contract by more than 21 per cent, dropping to 18 per cent. Although administrative and distribution expenses fell during the period, the savings were insufficient to counter the revenue shortfall and higher input costs.
Operating profit slid 35 per cent year on year to ₦276 million, representing just 18 per cent of full-year profit for 2025, while operating margin contracted to 8 per cent. Finance costs soared to ₦191 million, up from ₦73 million in the same period last year, already accounting for 43 per cent of last year’s total finance costs. Rising interest charges on term loans, commercial papers, and overdrafts sharply weakened the company’s interest coverage ratio, which dropped to 1.44 times from 5.79 times a year earlier.
Consequently, net profit fell 81 per cent to ₦57 million, representing only 6 per cent of the prior year’s total earnings.
Cutix’s balance sheet showed significant changes, with total assets climbing to ₦10.677 billion, a 33.56 per cent increase year on year. The growth was largely fuelled by current assets, which now account for over 57 per cent of the total asset base. Inventories and trade receivables were the major contributors, making up more than 56 per cent of total assets combined.
However, retained earnings dropped 72 per cent to ₦711 million, reflecting weakened profitability, while total borrowings surged 175 per cent to ₦5.004 billion. Borrowings now make up 47 per cent of total assets, signalling a heavier reliance on debt to sustain operations and finance expansion.
With nearly half of its assets now debt-funded, the company’s capital structure has become substantially more leveraged, magnifying both return potential and financial risk in a high-interest rate environment.
As of market close on August 29, 2025, shares of Cutix were priced at ₦3.50, representing a year-to-date gain of 52.2 per cent.
While the topline contraction and surging input costs weighed heavily on operating and pre-tax profitability, the company’s asset growth was concentrated in inventories and receivables, raising concerns about liquidity and working capital management. The combination of declining retained earnings and a sharp rise in borrowings underscores mounting financial strain.
The stock’s rally of more than 52 per cent this year suggests that investors remain optimistic about Cutix’s position within Nigeria’s cable industry, though the fundamentals signal rising risks. Unless receivables are collected more efficiently, inventory turnover improves, and debt servicing costs are controlled, profitability and dividend capacity could be limited in the current financial year.
Despite the challenging backdrop, Cutix has declared a final dividend of 10 kobo per share for the 2025 financial year, which is scheduled to be paid on September 2, 2025.