Julius Berger Nigeria Plc is expanding its revenue base and strengthening its pre-tax earnings, but losses from its diversification business and rising tax expenses are limiting the benefits of its growing construction operations.
The construction company recorded a 20.2 percent increase in profit before tax (PBT) to N35.92 billion in the nine months ended September 2026, from N29.89 billion in the corresponding period of 2025.
Its unaudited nine months financial statements show that revenue rose by 21.5 percent to N657.15 billion from N540.82 billion, reflecting stronger contributions from building projects, engineering services and its diversification activities.
However, the growth in revenue has not translated into stronger bottom-line earnings, with profit after tax declining by 44.1 percent to N10.19 billion from N18.25 billion.
Revenue growth was supported by stronger contributions from its government and private-sector customers. Government-related revenue increased to N548.74 billion from N439.81 billion, while private-sector revenue rose to N108.41 billion from N101 billion.
The performance underscores the continued importance of public infrastructure spending to the company’s business model, with government contracts accounting for approximately 83.5 percent of total revenue.
A breakdown of the company’s business segments reveals that building works and services are increasingly contributing to revenue expansion, while civil engineering remains its largest business by revenue.
Revenue from civil engineering projects declined to N346.09 billion from N350 billion, indicating relatively subdued growth in the company’s largest revenue-generating segment.
In contrast, building revenue increased by 25.8 percent to N162.82 billion from N129.44 billion.
The strongest expansion came from services, which more than doubled to N113.13 billion from N51 billion, representing a 121.8 percent increase.
Diversification segment revenue comprising its cashew processing business in Epe, Lagos, and the expansion of its construction business into new regional markets also increased significantly to N35.12 billion from N10.38 billion, reflecting the company’s efforts to broaden its business beyond traditional construction activities.
The segmental performance suggests that Julius Berger is gradually widening its revenue sources, although the profitability of these newer business activities remains a concern.
Its diversification segment recorded an operating loss of N25.77 billion, compared with N6.49 billion in the corresponding period of 2025.
This means losses from the segment nearly quadrupled, offsetting a significant portion of the profits generated by the company’s established construction and services businesses.
Civil engineering generated an operating profit of N24.67 billion, up from N16.36 billion, while building works contributed N14.62 billion, compared with N6.09 billion a year earlier.
Services generated N13.85 billion in operating profit, rising from N8.26 billion.
Another major factor shaping the company’s earnings performance is the sharp reduction in other gains.
Other gains and losses declined to N4.29 billion from N44.99 billion in the corresponding period of 2025.
This was largely driven by the absence of the substantial foreign exchange gains recorded in the previous year.
Julius Berger reported a net foreign exchange loss of N2.80 billion, compared with a gain of N38.25 billion in the prior-year period.
The company also recorded miscellaneous costs of N21.73 billion, although miscellaneous revenue of N22.78 billion provided some offset.
Despite the weaker contribution from other gains, operating profit increased by 13 percent to N27.37 billion from N24.22 billion.
Gross profit also rose by 31.3 percent to N105.21 billion, indicating that revenue growth outpaced the increase in direct project costs.
However, administrative expenses climbed by 8.7 percent to N76.06 billion from N69.99 billion, reflecting the cost burden associated with managing its expanding operations.
Investment income provided additional support, increasing by 33.2 percent to N12.86 billion from N9.66 billion.
Finance costs, however, rose to N4.31 billion from N3.99 billion, reflecting higher borrowing and financing expenses.
The combined effect of these factors helped lift pre-tax earnings, but the increase in income tax expense to N25.73 billion from N11.64 billion significantly reduced the profit available to shareholders.
Beyond its nine-month financial performance, Julius Berger’s future earnings prospects will depend significantly on its ability to execute its substantial pipeline of secured contracts.
The company’s financial statements disclosed outstanding performance obligations worth N1.38 trillion, representing revenue expected to be recognised from existing customer contracts.
Of this amount, N143.9 billion is expected to be recognised in 2026, while N1.239 trillion is scheduled for 2027 and beyond.
Building works account for N562.3 billion of the outstanding obligations, followed by civil engineering projects at N603 billion.
Services account for N168.9 billion, while diversification contributes N48.3 billion.
The order book provides revenue visibility beyond the current financial year and could support sustained business expansion if the company successfully executes its contracts.
However, the ability to convert these obligations into cash and profitable earnings will remain critical, particularly given the losses recorded by its diversification segment.
The company’s cash flow position also warrants attention. Cash generated from operating activities before tax and other adjustments declined sharply, with net operating cash flow turning negative at N22.46 billion from a positive N20.13 billion in the corresponding period of 2025.
Cash paid to suppliers and employees reached N545.75 billion, slightly exceeding cash receipts from customers of N544.92 billion.
Meanwhile, capital expenditure on property, plant and equipment increased to N36.34 billion from N6.76 billion, indicating a significant increase in investment in productive assets.
The company also raised N67.43 billion in borrowings during the period, supporting its financing activities.
Julius Berger ended September with cash and cash equivalents of N185.46 billion, compared with N175.19 billion a year earlier.
The construction company closed its last trading day on Friday at N310.80 per share on the NGX. Julius Berger began the year with a share price of N152.90 and has since gained 103 percent on that price valuation, ranking it 20th on the NGX in terms of year-to-date performance.
Chinwe Michael is a Nigerian business journalist and media professional with over 4 years of experience covering companies, financial markets, banking, fintech, economic policy, financial inclusion, and corporate affairs. She currently leads the Companies & Markets desk at BusinessDay, where she drives coverage of Nigeria’s corporate and capital markets, translates complex financial data into accessible stories, and mentors younger journalists. Prior to that, she was the head of the financial inclusion/fintech desk. With a background in banking and finance and extensive experience in media and communications, Michael has developed expertise in financial journalism, economic analysis, investigative reporting and market intelligence. Her work examines how monetary policy, corporate performance, capital flows, technology, and regulatory decisions affect businesses, investors, and households. She was selected from about 3,000 applicants as one of 20 journalists for Cohort 4 of the MTN Media Innovation Programme, gaining exposure to new approaches to journalism, technology, and media innovation. Her international journalism experience and engagement with professionals across Russia, Dubai, Saudi Arabia, and others in different sectors have further broadened her understanding of global communication and development.