Chellarams Posts Steady Top-line Growth Amid Cost Pressures, FX Losses
Chellarams Plc has released its unaudited consolidated and separate financial statements for the first quarter ended March 31, 2025, showing a mixed performance that reflects both revenue growth and cost headwinds, with implications for investors assessing long-term positioning.
Group revenue for the year surged to N22.1 billion, up from N13.8 billion in Q1 2024, indicating strong top-line growth. This revenue boost was somewhat supported by a marginal year-on-year reduction in cost of sales, which declined from N12.8 billion to N12.5 billion, signaling improved cost management or shifts in product mix.
Operating income saw a modest improvement, rising from N612.4 million to N713.3 million. However, this gain was offset by a notable increase in operating expenses. Selling and distribution costs jumped by 63.5%, from N164.8 million to N269.4 million, while administrative expenses increased by 29.8%, rising from N1.21 billion to N1.57 billion.
Despite these pressures, profit from operating activities more than doubled to N424.8 million, up from N216.7 million, demonstrating improved operational efficiency.
Finance costs increased significantly, climbing from N646.8 million to N916.8 million, reflecting the company’s growing exposure to debt-related obligations. In addition, the group recorded a net foreign exchange loss of N2.08 billion, maintaining its previous year’s FX loss at the same level — an indication of persistent macroeconomic volatility impacting the business.
As a result, profit for the year swung deeper into negative territory, falling to a net loss of N3.58 billion, compared to a loss of N3.00 billion in Q1 2024.
A bright spot in the quarter was the recognition of a N6.78 billion net revaluation gain, which boosted total comprehensive income to N4.19 billion, reversing the N3.00 billion comprehensive loss reported in the same period last year. This revaluation gain positively affected shareholders’ equity, positioning the group’s net assets at N2.20 billion, compared to a negative equity of N1.80 billion in 2024.
Inventory increased from N1.98 billion to N2.72 billion, indicating a buildup possibly tied to anticipated demand along slower turnover. Trade receivables rose modestly to N1.71 billion from N1.62 billion.
Cash and cash equivalents recorded a notable jump to N8.03 billion, from N6.97 billion, improving liquidity. Trade and other payables expanded to N11.35 billion, up from N8.66 billion.
Short-term borrowings tripled to N3.46 billion, while long-term borrowings reduced significantly to N2.36 billion from N4.94 billion. Current tax liabilities remained stable, increasing slightly to N220.6 million from N216.0 million.
Amounts due from related parties marginally declined to N2.39 billion from N2.43 billion. Earnings per share (EPS) dropped by 24.5%, falling to 262 kobo, down from 347 kobo, reflecting the impact of losses on shareholder returns.
Investor’s Recommendation: Buy, Sell, or Hold?
At the current market price of N9.53 per share, Chellarams trades at a discount to its 52-week high of N13.11. While the company’s net loss and FX exposures are concerning, the rebound in total comprehensive income and recovery in net assets suggest a business gradually stabilising. Investors should weigh the improved asset base and revenue trajectory against rising financing costs and currency risks.
Given the stronger balance sheet, positive operating cash flow indicators, and upward revenue momentum, Chellarams Plc warrant a cautious “HOLD” with potential upside — particularly for long-term investors anticipating a sustained turnaround.
However, risk-averse investors or those seeking short-term gains may consider a “SELL” or avoid entry at current levels, until the company delivers consistent profitability and tames its financing and FX-related losses. #Chellarams Posts Steady Top-line Growth Amid Cost Pressures, FX Losses#
