…Revenue Weakness, High Borrowing Costs Hit Earnings
Caverton Offshore Support Group Plc recorded a loss after tax of N8.69bn in the first half of 2026, reversing from a profit of N2.04bn reported in the corresponding period of 2025, as declining revenue and elevated finance costs weighed heavily on the company’s earnings.
The unaudited financial statements for the six months ended June 30, 2026, filed with the Nigerian Exchange (NGX), showed that the offshore logistics and marine services provider generated N14.68bn in revenue during the period, representing a 10.9 per cent decline from N16.47bn recorded in the first half of 2025.
Despite maintaining positive operating performance, the company’s profitability was eroded by rising administrative expenses and significant borrowing costs.
Operating profit fell to N7.33bn from N9.37bn in the corresponding period last year, reflecting lower business activity and continued pressure on margins.
Administrative expenses climbed sharply to N7.90bn, compared with N4.74bn a year earlier, further squeezing earnings.
The company’s total operating result consequently slipped to a loss of N283.09m, compared with an operating profit of N11.57bn in the first half of 2025.
Finance costs remained a major drag on performance, amounting to N8.37bn, although marginally lower than the N8.50bn recorded in the corresponding period of last year.
The sizeable interest burden outweighed operating earnings, resulting in a pre-tax loss of N8.66bn, compared with a pre-tax profit of N2.07bn recorded in H1 2025.
After accounting for an income tax expense of N31.8m, the Group posted a net loss of N8.69bn, with shareholders accounting for N8.60bn of the loss, while non-controlling interests contributed N86.88m.
Consequently, basic earnings per share deteriorated to a loss of N2.59, compared with earnings of 61 kobo in the corresponding period of 2025.
The balance sheet also reflected mounting financial pressure.
Total assets increased by 2.9 per cent to N122.04bn as of June 30, 2026, from N118.63bn at the end of December 2025, driven largely by higher trade receivables and contract assets.
Trade and other receivables rose to N24.35bn from N22.37bn, while contract assets increased significantly to N6.08bn from virtually nil at year-end.
However, cash and cash equivalents declined by more than 50 per cent to N1.68bn, compared with N3.37bn at the end of December 2025, indicating tighter liquidity during the period.
The company’s debt profile remained elevated. Non-current interest-bearing loans and borrowings almost doubled to N35.45bn, while current borrowings stood at N41.62bn, underscoring the significant financing obligations confronting the Group.
Total liabilities increased by 8.6 per cent to N137.54bn from N127.39bn at the end of 2025, reflecting additional long-term borrowings and lease obligations.
As a result, shareholders’ equity remained in negative territory, worsening to negative N15.50bn, compared with negative N8.76bn at the close of the 2025 financial year, highlighting the impact of accumulated losses on the Group’s capital position.
The half-year performance underscores the challenges facing Caverton as weaker revenue generation, rising operating expenses and substantial finance costs continue to pressure profitability despite the company’s ability to generate positive operating income from its core business.
Investors will be looking to management’s efforts to improve operational efficiency, strengthen cash flows and reduce debt-related costs in the second half of the year to restore sustainable profitability.
(The Whistler)