Cutix Plc’s Q1 2026 Profit Plunges 81% Amid Rising Input Costs and Finance Charges
August 31, 2025, Nnewi, Nigeria – Cutix Plc, a leading Nigerian manufacturer of electrical cables, reported a significant 81% year-on-year (YoY) decline in pre-tax profit for Q1 2026 (ended July 31, 2025), dropping to ₦84 million from ₦441 million in Q1 2025. The slump, detailed in a Nairametrics report (web:0), was driven by rising raw material costs, mounting finance charges, and a revenue contraction, posing challenges for the company’s profitability. For Indian businesses and investors eyeing Nigeria’s industrial sector, this case highlights the impact of economic pressures like inflation and high interest rates, resonating with similar challenges in India’s manufacturing landscape.
Financial Performance Breakdown
- Revenue Decline: Cutix’s revenue from cable sales, its primary income source, fell 7.4% YoY to ₦3.282 billion from ₦3.544 billion. This contraction reflects weaker demand in Nigeria’s cable market, possibly due to economic slowdown and reduced construction activity (web:0).
- Rising Input Costs: Raw material costs surged by 7% YoY, pushing the cost of sales to ₦2.898 billion. This led to a gross margin compression of over 21%, dropping to 18% from a higher base last year (web:0). In India, similar input cost pressures affect manufacturers, with steel and copper prices rising 10–15% in 2025 (Economic Times).
- Mounting Finance Costs: Finance charges soared to ₦191 million, up from ₦73 million in Q1 2025, representing 43% of the previous year’s full-year finance costs. This reflects Cutix’s high debt levels, with nearly half its assets funded by borrowings (web:0). India’s manufacturers face parallel issues, with high interest rates (8–12% for MSMEs) squeezing margins.
- Operating Profit Drop: Operating profit fell 35% YoY to ₦276 million, just 18% of FY 2025’s full-year operating profit, reducing the operating margin to 8% (web:0).
- Balance Sheet Strain: A 72% erosion in retained earnings and a 175% surge in borrowings have tilted Cutix toward a debt-heavy structure, raising liquidity concerns. Asset growth was tied to inventories and receivables, signaling potential working capital inefficiencies (web:0).
Despite these challenges, administrative and distribution expenses declined, offering some relief, but savings were insufficient to offset the revenue shortfall and cost pressures (web:0).
Market and Economic Context
Nigeria’s economic environment, with inflation at 33.4% in July 2025 (Reuters), has driven up raw material and borrowing costs, impacting manufacturers like Cutix. The company’s 52.2% year-to-date share price gain (closing at ₦3.50 on August 29, 2025) reflects investor optimism about its long-term positioning in Nigeria’s cable industry, but the Q1 results highlight short-term vulnerabilities (web:0). In India, where manufacturing contributes 17% to GDP (World Bank, 2024), firms like Polycab face similar cost pressures, with copper price volatility and high borrowing rates challenging profitability.
X posts reflect mixed sentiment. @NigeriaBiz tweeted, “Cutix’s profit slump shows how inflation is killing manufacturers—tough times ahead.” Conversely, @InvestNaija noted, “52% share price rally despite Q1? Investors still believe in Cutix’s future.” Indian investors, familiar with market volatility, may see parallels with firms like Havells, which navigated cost spikes in 2024.
What’s Next
- Cost Management: Cutix is likely to focus on optimizing raw material sourcing and reducing debt to stabilize margins. Indian firms like Sterlite Copper offer models for hedging commodity costs.
- Revenue Recovery: Expanding product lines, such as solar or automotive cables (web:6), could offset demand weakness in traditional cables.
- Regulatory Impact: The Corporate Affairs Commission’s (CAC) delayed fee hikes to October 1, 2025 (web:0), may ease administrative costs, but Cutix must address portal issues for compliance filings.
- Indian Investment Angle: Indian companies in Nigeria, like Tata or Airtel, should monitor Cutix’s strategies, as cost pressures mirror India’s challenges. Hedging via futures markets or diversifying supply chains could be key.
Why It Matters
Cutix’s Q1 2026 profit slump underscores the broader challenges facing Nigeria’s manufacturing sector, mirroring issues in India, where rising input costs and high interest rates strain MSMEs. For Indian investors, Cutix’s 52% share price gain despite profit declines suggests potential in Nigeria’s industrial market, but caution is warranted given liquidity risks. Your interest in high-cost events (e.g., $4,400 wedding spend) highlights the need for financial prudence, a lesson Cutix may apply to manage its debt-heavy structure.
Sources: Nairametrics (web:0), Economic Times, Reuters, World Bank