Julius Berger Nigeria Plc’s profit after tax fell by 14.7 percent in the first half of 2026 despite a strong increase in revenue, highlighting the growing pressure on the construction company’s earnings conversion as higher sales failed to translate into stronger bottom-line growth.
The company’s unaudited results for the six months ended June 30, 2026, show that profit after tax declined to N6.06 billion from N7.11 billion in the corresponding period of 2025. Earnings per share also fell to N3.69, from N4.34 a year earlier.
The decline came despite a 23.6 percent increase in revenue to N424.56 billion, from N343.45 billion, indicating that the company generated significantly more business but retained less of it as profit.
The results show a widening gap between Julius Berger’s top-line expansion and its bottom-line performance, with the company’s net profit margin falling to about 1.4 percent, from 2.1 percent in the first half of 2025.
Pre-tax profit jumps, but tax bill erodes earnings
Julius Berger’s profit before tax actually rose sharply during the period, climbing 78.6 percent to N23.52 billion, from N13.17 billion in H1 2025.
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The stronger pre-tax performance was supported by an increase in operating profit, which rose 84.2 percent to N17.38 billion, from N9.43 billion. Gross profit also increased by 11.4 percent to N66.82 billion, although gross margin weakened to approximately 15.7 percent from 17.5 percent.
However, the gains above the operating line were substantially eroded by taxation.
Income tax expense surged 188.1 percent to N17.46 billion from N6.06 billion in the comparable period. The company said its tax rate assumption is based on a 30 percent corporate income tax rate and a three percent education tax on assessable profit.
This meant that while pre-tax profit increased by more than three-quarters, only a fraction of the gain reached shareholders.
Revenue growth comes with margin pressure
The company’s revenue growth was broad-based across its reported activities.
Revenue from its major reportable segments increased to N424.56 billion in the first six months, from N343.45 billion a year earlier. Building works, civil engineering and other business lines all contributed to the expansion.
Yet the cost of generating that revenue remained substantial. Cost of sales climbed to N357.74 billion, from N283.44 billion, absorbing roughly 84 percent of revenue during the period.
Administrative expenses also rose to N50.19 billion, from N43.82 billion, although the increase was considerably slower than revenue growth.
The company also recorded N8.98 billion in investment income, up from N6.56 billion, providing an important boost to pre-tax earnings. Finance costs were broadly stable at N2.84 billion, compared with N2.83 billion in H1 2025.
Second-quarter profit provides some relief
The H1 numbers were weighed down by the first-quarter performance, as Julius Berger’s second-quarter earnings showed some improvement.
For the three months to June, revenue rose to N246.98 billion, from N162.94 billion, while profit before tax increased to N13.69 billion, from N7.25 billion.
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More importantly, quarterly profit after tax edged up to N3.61 billion, from N3.54 billion in the second quarter of 2025, representing a modest 2 percent increase.
This suggests that the company’s earnings trajectory improved in the second quarter, although the recovery was not strong enough to offset the weaker first-half bottom line.
Cash flow remains a key concern
Despite the reported increase in profitability, Julius Berger continued to face pressure in converting accounting earnings into operating cash.
Cash flow from operating activities was negative N35.23 billion in H1 2026, although this represented an improvement from the negative N63.84 billion recorded in H1 2025.
The company spent N29.76 billion on property, plant and equipment, compared with N3.25 billion a year earlier, while it raised N56.35 billion through borrowings during the period. Cash and bank balances stood at N168.80 billion at June 30, down from N192.15 billion at the end of 2025.
The cash-flow profile means Julius Berger’s stronger operating profit is yet to fully translate into internally generated cash, as working-capital requirements and capital expenditure continue to absorb liquidity.
The construction firm closed its last trading day on Tuesday,at N310.80 per share on the Nigerian Stock Exchange (NGX), gaining 103 percent on that price valuation year-to-date, ranking it 18th on the NGX in terms of year-to-date performance
