Caverton Returns to Profit on Cost Cuts Amid Higher Debt Expense

Caverton Offshore Support Group Plc overhead cost cutting programme implemented with a view to boosting margins and returns has yielded fruit as the company has returned to the path of profitability, but it faces difficulty paying

Despite foreign exchange revaluation headwinds caused by the devaluation of the currency by the Central Bank of Nigeria (CBN) and higher costs of operating aircrafts, the support and logistics company listed on the Nigerian Exchange Limited (NGX) posted a profit after tax (PAT) of N1.64 billion as at March 2025, from a loss of N1.81 billion as at March 2024.

It is important to note that the return to profit means there is a glimmer of hope that shareholders will be paid dividend this year if the firm sustains the growth momentum

The improvement in margins were bolstered by a reduction in costs as operating expenses dipped by 39 percent to N3.35 billion as at March 2025 even as revenue was down 3.35 percent.

Administrative expenses were down 40.19 percent to N1.83 billion even amid rising inflation and foreign exchange volatility.

The company whose services are needed by local and international oil and gas firms is reeling from intense competition from those who are using price reduction as a weapon to increase market share.

Caverton is carrying out measures to improve on revenue growth.

To further boost revenues, the Group has been exploring further opportunities within and outside the oil and gas sector. In addition to growing its market share in the oil and gas logistics sector, our primary focus for the year will be on third party training and maintenance.

The company will be needing capital injection to help strengthen its balance sheet as it has negative retained earnings of N52.94 billion caused by recurring operating losses in the past.

For instance, interest coverage ratio stood at 0.7965 at March 2025, that compares with 2024’s 0.21, according to data from MoneyCentral.

The figure is a measure of a company’s ability to repay its debts, with a ratio of at least 2 generally considered the minimum acceptable amount for a company with solid revenues.

Analysts typically prefer a coverage ratio of 3 or higher.

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