Julius Berger: Bigger Revenue, But The Cash Isn’t Following Yet

JBERGER’s 103% Rally: Growth Story, or Market Running Ahead of Fundamentals?

Julius Berger Nigeria Plc has been the NGX’s standout construction stock in 2026. Trading at approximately ₦310.80, the stock is up over 103% YTD from ₦152.90, with a 52-week range of ₦121.70 to ₦315.00 and a market cap of about ₦497.28bn. The rally reflects real optimism: investors are pricing in the ₦1.566 trillion order backlog reported in H1 and the government’s renewed infrastructure push. Liquidity has also improved, with average daily volume of 133,933 shares showing both institutional and retail interest. On valuation, a trailing P/E of 16.8x to 17.3x against TTM EPS of ₦17.97-₦18.52 puts JB slightly above global construction peers, but still reasonable for a company with multi-year revenue visibility.

Yet the rally looks ahead of the financial reality delivered so far. Julius Berger Nigeria Plc closed H1 2026 with the kind of headline numbers that should excite shareholders: revenue up 23.6% to ₦424.56bn, operating profit up 84.2% to ₦17.38bn, and an order book of ₦1.566 trillion waiting to be delivered. On paper, it looks like the country’s biggest construction firm is firing on all cylinders.

But the details tell a more complicated story — one where growth has not yet translated into value.

The first weakness is at the bottom line. Despite the jump in operating profit, profit after tax actually fell 14.7% to ₦6.06bn, and earnings per share dropped to ₦3.69 from ₦4.34 a year earlier. The culprit was taxation. Tax expense surged 188% to ₦17.46bn, pushing the effective tax rate to 74.2% from 46% in H1 2025. For a capital-intensive contractor, that tax bite wiped out almost all the gains made on site.

The second weakness is cash. Julius Berger remained cash-negative from operations. Cash used in operations was ₦22.59bn, and after ₦12.64bn in taxes paid, net operating cash outflow hit ₦35.23bn. The company ended June with ₦168.80bn in cash, but that was propped up by ₦56.35bn in new borrowings taken during the half. In other words, the business borrowed to stay liquid, not because projects were generating cash.

Threats compound the problem. More than 80% of H1 revenue came from government contracts. That concentration leaves JB exposed to budget delays, variation orders, and slow receivables collection — trade receivables alone stand at ₦143.25bn. FX risk also lingers. The group booked a ₦1.56bn net foreign exchange loss in H1, and with imported materials, equipment leases, and a German subsidiary, naira volatility can quickly erode margins. Add rising finance costs, total liabilities up 15.4% to ₦788.29bn, and lease liabilities of ₦34.65bn, and the balance sheet looks heavier even as revenue grows.

Did strengths help neutralize these pressures? Partially.

Julius Berger’s core strength is execution and scale. The Civil Works segment delivered ₦352.53bn in revenue, up 27.8% YoY, and that drove gross profit up 11.4%. Management also tightened controls: impairment on receivables fell 29.7%, and “other gains and losses” swung from a ₦3.57bn loss in H1 2025 to a ₦3.05bn gain. That discipline helped operating margin expand from 2.74% to 4.09%.

The company also leaned on its balance sheet strength. With ₦168.80bn cash and ₦8.98bn in investment income — up 37% — treasury management provided a buffer against higher finance costs. Asset recycling helped too, with ₦5.64bn raised from PPE disposals. And the brand itself remains a moat: 55 years of delivery, 7 subsidiaries, and preferred-contractor status with the Federal Government give JB access to deals competitors cannot bid for.

These strengths kept the company afloat and growing, but they did not fully neutralize the weaknesses. Operating leverage was real, yet it was cancelled out by tax. Cash generation improved from last year, but it is still negative. Debt went up to fund working capital, not to expand capacity.

Opportunities: booked, not yet exploited.

The biggest opportunity is the ₦1.566 trillion order backlog — ₦919.6bn in Building Works and ₦383.2bn in Civil Works scheduled for 2026 and beyond. That is years of revenue visibility. The question is conversion. H1 showed JB can win and execute projects, but it has not yet turned that backlog into consistent operating cashflow.

Diversification offers another path. The Services and Diversification segments, plus Julius Berger International GmbH and the Free Zone Enterprise, could reduce reliance on government civil jobs and bring in foreign-currency earnings. In H1, “Europe/Services” contributed ₦25bn, up modestly, but still small relative to the total.

Asset optimization is also on the table. With ₦323.7bn in PPE, there is room to improve utilization and reduce leasing costs. The company began this in H1, but capex of ₦29.76bn suggests it is still in expansion mode rather than efficiency mode.

The verdict
Julius Berger is in a classic construction cycle: revenue and backlog are rising, margins are improving, but cash and net profit lag. Its strengths — execution, brand, liquidity, and a massive order book — have kept it growing and have softened the impact of tax, debt, and FX threats. They have not yet solved them.

Until the company converts its ₦1.566tn backlog into cash, brings the effective tax rate down, and reduces dependence on borrowing for working capital, H1 2026 will read as a story of operational progress without shareholder payoff.

For now, Julius Berger is building more. It just hasn’t yet built better returns.