Chellarams Plc returned to profitability in the first quarter of 2026, posting a profit before tax of N1.45 billion, compared with a loss before tax of N38.52 million in the corresponding period of 2025, driven by strong revenue growth, improved margins and lower finance costs.

The unaudited financial statement for the first quarter of the year (Q1,2026) filed with the Nigerian Exchange (NGX) on Thursday, July 30, shows that the diversified consumer goods company generated revenue of N9.66 billion, representing an 83.64% year-on-year increase from N5.26 billion, according to its unaudited consolidated financial statements for the period.

Profit after tax stood at N1.23 billion, reversing a N45.24 million loss recorded a year earlier. Profit attributable to shareholders also recovered to N1.10 billion, from a N35.82 million loss in Q1 2025.

Key highlights (Q1 2026 vs Q1 2025)

  • Revenue: N9.66 billion, up 83.64% YoY
  • Profit before tax: N1.45 billion, compared with N38.52 million loss
  • Profit after tax: N1.23 billion, compared with N45.24 million loss
  • Cost of sales: N7.55 billion, up 58.61% YoY
  • Gross profit: N2.11 billion, up 321.31% YoY
  • Distribution expenses: N137.80 million, up 84.83% YoY
  • Administrative expenses: N464.44 million, up 26.58% YoY
  • Finance cost: N260.77 million, down 4.67% YoY
  • Total assets: N22.16 billion
  • Total equity: N3.81 billion, up from N2.58 billion
  • Profit attributable to owners: N1.10 billion, compared with N35.82 million loss

Driving the numbers:

Chellarams’ return to profitability in Q1 2026 was driven primarily by a sharp rebound in revenue, which rose 83.64% year-on-year to N9.66 billion from N5.26 billion, supported by stronger trading, distribution and manufacturing activities across its operating businesses.

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  • The topline growth reflected a combination of improved pricing across product categories to offset elevated input costs and inflation, stronger sales volumes, and increased contributions from key subsidiaries including Dynamic Industries Limited, United Technical and Allied Services Limited, and Chellarams DMK Limited.
  • The recovery marked a significant improvement from the weak operating environment recorded in Q1 2025.
  • Revenue growth also comfortably outpaced the increase in production costs. While cost of sales rose 58.61% to N7.55 billion, it grew at a much slower pace than revenue, allowing gross profit to more than quadruple to N2.11 billion from N501.60 million.
  • As a result, gross margin expanded to approximately 21.9% from 9.5%, highlighting stronger pricing power, improved cost absorption and better operational efficiency.

The stronger operating performance enabled the company to swing from a pre-tax loss of N38.52 million in Q1 2025 to a profit before tax of N1.45 billion, while profit after tax recovered to N1.23 billion from a N45.24 million loss a year earlier.

Lower finance costs, which declined 4.67% to N260.77 million, further supported earnings growth despite a higher level of business activity.

However, distribution expenses increased 84.83% to N137.80 million, broadly in line with higher sales volumes, while administrative expenses rose 26.58% to N464.44 million.

The company also recorded an other income loss of N202.17 million, slightly wider than the N174.91 million loss reported in the corresponding period of 2025.

Despite these pressures, stronger business activity across its operating segments, improved pricing, expanding margins and disciplined financing costs combined to drive Chellarams’ strongest quarterly turnaround in recent years, with profitability recovering significantly faster than revenue growth.

Balance sheet performance:

Total assets stood at N22.16 billion, down from N23.12 billion at March 2026, mainly reflecting lower inventories and trade receivables.

  • Non-current assets amounted to N15.36 billion, supported primarily by N11.23 billion in investment property and N3.84 billion in property, plant and equipment.
  • Current assets totalled N6.81 billion, comprising N3.41 billion in trade receivables, N2.60 billion in inventories and N235.16 million in cash and cash equivalents.
  • Total equity improved to N3.81 billion from N2.58 billion, supported by retained earnings following the return to profitability.
  • Accumulated losses narrowed, with the retained earnings deficit improving to N8.21 billion from N9.31 billion at March 2026.

Current liabilities remained elevated at N14.70 billion, dominated by N11.47 billion in trade and other payables, alongside N1.90 billion in bank import finance and N665.41 million in current tax liabilities.

Non-current liabilities stood at N3.66 billion, comprising N1.84 billion in long-term loans, N1.31 billion in subordinated debt and N507.21 million in deferred tax liabilities.

What you should know:

While profitability has improved substantially, accumulated losses remain significant, suggesting sustained earnings growth will be needed to further strengthen the balance sheet in subsequent quarters.

  • The NGX suspended trading in Chellarams’ shares on September 30, 2021, after the company failed to file its audited financial statements for the year ended March 31, 2021, within the Exchange’s stipulated cure period.
  • November 12, 2021, NGX lifted the suspension after Chellarams submitted its outstanding audited financial statements for FY2021 and its unaudited financial statements for the quarter ended June 30, 2021.
  • Chellarams is actively traded on NGX with the stock trading around N13.20.
  • The price has stagnated at N13.20 since December 15, 2025. The filing of its Q1 2026 financial statements could move the price in the weeks ahead.

However, investors are likely to monitor the company’s negative working capital position, as current liabilities exceeded current assets by N7.89 billion, alongside its heavy reliance on supplier financing and relatively low cash balance of N235.16 million.