Cutix posts pre-tax loss of N47.9 million FY-2026 as finance costs surge

Cutix Plc has recorded a pre-tax loss of N47.90 million for the full year ended April 30, 2026, swinging sharply from a pre-tax profit of N1.62 billion in the corresponding period of 2025, as a 170.68% surge in finance costs overwhelmed operating income and erased the gains from a marginal improvement in gross margin.

This is according to the company’s unaudited financial statements for the year ended April 30, 2026, filed on the Nigerian Exchange.

Revenue declined by 6.35% to N14.77 billion from N15.77 billion in FY 2025, reflecting weaker topline performance despite continued activity in its cables, wires, and related products segment.

However, a tripling of finance costs to N1.04 billion from N383.24 million — pushing interest charges above operating profit of N930.29 million for the first time — eroded profitability entirely, leaving the company with a loss position and negative retained earnings at year-end.

An analysis of Cutix’s FY 2026 financial performance reveals that the company’s path from positive to negative profitability was shaped by pressure at multiple levels of the income statement, with finance cost emerging as the decisive factor.

Cost of sales declined by 6.86% to N11.88 billion, broadly in line with the revenue decline.

As a result, gross profit fell by only 4.22% to N2.90 billion, with gross margin improving marginally to 19.61% from 19.17%.

Operating expenses escalated as administrative expenses rose 21.97% to N1.51 billion, while selling and distribution costs surged 66.62% to N451.37 million.

The combined effect pushed operating profit down by 38.44% to N930.29 million and compressed operating margin to 6.30% from 9.58% in FY 2025.

The most significant pressure point, however, came from finance cost, which surged 170.68% to N1.04 billion from N383.24 million. At that level, finance cost exceeded operating profit — implying that Cutix’s operations generated insufficient earnings to cover its interest obligations. This single line item was the determining factor in the swing from N1.62 billion pre-tax profit in FY 2025 to a N47.90 million pre-tax loss in FY 2026.

Cutix’s balance sheet weakened materially during the year. Total assets declined 14.12% to N7.48 billion from N8.71 billion, driven by a contraction in current assets to N4.97 billion from N6.22 billion.

Inventories fell 13.65% to N4.08 billion, while trade and other receivables dropped sharply by 57.33% to N524.89 million, suggesting stronger collections, reduced credit sales, or lower outstanding balances from weaker revenue.

Cash and bank balances improved strongly by 123.39% to N312.62 million, up from N139.94 million, a positive development offset by short-term borrowings of N2.77 billion.

Total liabilities rose 3.83% to N3.95 billion, with all of Cutix’s N2.77 billion in borrowings now concentrated in short-term form following the liquidation of N56.11 million in long-term debt. This concentration raises refinancing risk in an environment where interbank rates remain elevated.

Working capital fell approximately 51.29% to N1.34 billion from N2.74 billion — more than halving the company’s short-term financial flexibility in a single year.

Equity attributable to shareholders fell 28.08% to N3.52 billion, with retained earnings moving from a positive N1.37 billion to a negative N25.98 million. The erosion was driven by the reported loss, a dividend payment of N704.53 million, and other equity movements. An unclaimed dividend written back of N156.25 million was almost entirely offset by a refund of N160.02 million, contributing a negligible net positive of around -N3.77 million.

Cutix Plc shares have remained unchanged, underperforming the broader NGX Industrial Goods Index significantly in 2026, reflecting investor concern about the company’s earnings trajectory and rising leverage well ahead of the FY 2026 result.

The stock closed flat year-to-date at N3.10 last Friday, May 29, 2026 against a broader NGX All-Share Index that has gained 60.09% and NGX Industrial Goods Index that has returned over 115% in the same period.

With the company now reporting an outright pre-tax loss and retained earnings in negative territory, further near-term selling pressure cannot be ruled out as institutional investors reassess the stock’s recovery timeline.

A reduction in short-term borrowings — ideally through refinancing into longer-tenor, lower-cost facilities and a possible return to positive pre-tax profit in Q1 FY 2027 (the period ending July 2026) may restore its valuation outlook.

Cutix Plc operates a May-to-April financial year, making it one of the few NGX-listed industrial goods companies with a non-calendar year-end. Its FY 2026 results therefore cover May 2025 to April 2026.

Cutix had reported a pre-tax profit of N1.62 billion in FY 2025, with earnings per share of 15.98 kobo, a performance that supported the dividend payment of N704.53 million made during FY 2026.

However, the swing to a -0.68 kobo EPS in FY 2026 raises an important question about whether the board will maintain or reduce its dividend in the next reporting cycle, particularly as retained earnings have now entered negative territory.