VFD Group Plc, a Nigerian proprietary investment company listed on the Nigerian Exchange (NGX), reported a pre-tax profit of N4.1 billion for the first quarter of 2025, as detailed in its unaudited financial results. This marks a 34.9% increase from the N3.04 billion pre-tax profit recorded in Q1 2024. The growth was driven by strong investment gains, particularly in treasury operations, dividends, and strategic divestments.
Key Financial Highlights for Q1 2025:
- Gross Earnings: Rose 27% year-on-year to N19.8 billion, up from N15.3 billion in Q1 2024, reflecting robust top-line growth.
- Net Investment Income: Increased significantly, contributing to the profit surge, though exact figures for Q1 2025 were not specified in available data. In Q1 2024, net investment income was N4.8 billion, up from N611 million in Q1 2023, indicating a trend of strong investment performance.
- Other Income: Continued to support earnings, with Q1 2024 data showing a rise to N2.6 billion from N1.4 billion in Q1 2023, driven by diversified income streams like logistics, hospitality, and foreign exchange gains.
- Total Assets: Grew to N328.6 billion by the end of 2024, a 49.9% increase from N219.2 billion in 2023, reflecting ongoing asset expansion. No specific Q1 2025 asset figure was provided, but the trend suggests continued growth.
- Profit After Tax: Reached N2.62 billion in Q1 2024, a 900% increase from N220 million in Q1 2023, and Q1 2025 is expected to maintain strong profitability given the pre-tax profit growth.
Drivers of Performance:
- Strategic Investments and Divestments: The Group’s Managing Director/CEO, Nonso Okpala, attributed the Q1 2025 performance to effective investment strategies, including treasury-related income and dividends. Strategic divestments, such as the sale of a 30% stake in Abbey Mortgage Bank for N3.1 billion and 343.5 million shares in Atiat Limited for N7 billion in 2024, bolstered earlier earnings and likely supported Q1 2025 gains.
- Operational Efficiency: Despite rising operating expenses, VFD Group maintained cost discipline, contributing to profitability. The company’s focus on digital transformation and innovation, particularly through its subsidiary VBank, enhanced operational performance.
- VBank Contribution: VFD Group’s digital banking arm, VFD Microfinance Bank (VBank), received a N5 billion capital injection in February 2025, strengthening its role in revenue diversification. VBank’s innovative banking solutions were cited as a key growth driver.
- Market Confidence: The company’s market capitalization surged 116% to N121.6 billion by April 22, 2025, from N56.2 billion, reflecting strong investor confidence. The stock price closed at N52.80 per share on February 12, 2025, with an 18.9% year-to-date gain.
Challenges and Outlook:
- Rising Costs: Investment expenses and finance costs have increased, with 2024 data showing finance costs at N37.5 billion (up from N25.3 billion in 2023). This trend may pressure margins if not managed.
- Liquidity Concerns: Operating cash flow dropped significantly in 2024 to N4.52 billion from N17.42 billion in 2023, raising concerns about reliance on external financing like the N6 billion commercial paper issued in February 2025 at a 24.55% discount rate.
- Q1 2025 Forecast: VFD Group projected Q1 2025 gross earnings of N36.83 billion and a pre-tax profit of N2.8 billion, but the actual N4.1 billion pre-tax profit exceeded expectations, signaling stronger-than-anticipated performance. Full-year 2025 pre-tax profit is forecasted at N16.44 billion, suggesting continued growth.
Context and Sentiment:
The Q1 2025 results build on VFD Group’s remarkable 2024 recovery, where it reported a full-year pre-tax profit of N12.4 billion, reversing a N1 billion loss in 2023. The company’s diversified portfolio across financial services, banking, technology, real estate, and hospitality, combined with strategic moves like a N12.5 billion rights issue in 2024, has strengthened its financial position. Posts on X from sources like @MobilePunch and @kiinmediang highlighted the 27% gross earnings growth, reflecting positive sentiment among stakeholders.
Conclusion:
VFD Group’s N4.1 billion pre-tax profit in Q1 2025 underscores its resilience and strategic focus on investment gains, driven by treasury operations, dividends, and divestments. While challenges like rising finance costs and reduced operating cash flow persist, the company’s robust earnings growth, asset expansion, and VBank’s digital innovations position it well for sustained performance. Investors will monitor its ability to balance expansion with financial sustainability in a challenging economic environment. For further details, stakeholders can refer to VFD Group’s filings on the NGX or visit https://vfdgroup.com/investor-information/.
