Transcorp Power Plc reported a weaker first half of 2026 as recurring transmission infrastructure challenges and lower electricity sales weighed on revenue and profitability, although improved cost discipline helped cushion the impact and enabled the company to maintain margins.

The power generation company posted a pre-tax profit of N54.99 billion for the six months ended June 30, 2026, representing a 6.37% year-on-year decline from N58.73 billion recorded in the corresponding period of 2025.

The earnings slowdown was largely driven by a softer second quarter. Pre-tax profit fell 61.1% quarter-on-quarter to N15.40 billion from N39.59 billion in the first quarter and was marginally below the N15.44 billion posted in the second quarter of 2025, highlighting how operational constraints intensified during the period.

Even with the weaker earnings, the company declared an interim dividend of N1.50 per ordinary share, reaffirming confidence in its cash generation and long-term outlook. The dividend will be paid electronically on July 23, 2026, to shareholders on the register as of July 20, subject to the appropriate withholding tax and completion of e-dividend registration.

Revenue Declines As Transmission Bottlenecks Persist

Revenue declined across Transcorp Power’s major operating segments as the company generated less income from both electricity supplied to the grid and capacity payments.

Second-quarter revenue fell 12.95% to N87.37 billion from N100.37 billion a year earlier.

For the first half, revenue from energy delivered, the company’s largest source of income, declined to N138.94 billion from N150.80 billion, while capacity charge revenue fell to N43.02 billion from N55.00 billion.

Energy sales accounted for approximately 76.4% of total revenue during the period, while capacity payments contributed the remaining 23.6%, underscoring the company’s continued reliance on electricity generation volumes.

Domestic sales experienced the sharpest decline, with revenue from local customers falling to N116.66 billion from N146.77 billion. By contrast, international revenue increased to N65.30 billion from N59.04 billion, partly offsetting the weakness in the domestic market and demonstrating growing export opportunities through regional electricity trade.

Management attributed much of the pressure to recurring vandalism of transmission infrastructure, which limited the evacuation of available generation capacity. The issue illustrates a persistent structural challenge within Nigeria’s electricity value chain, where generation companies are often unable to fully monetize available capacity because transmission infrastructure cannot carry all the electricity produced.

The company indicated that while generating capacity remained available, damaged transmission lines prevented optimal dispatch, reducing energy sales and revenue despite steady operational capability.

Margins Improve Despite Lower Sales

One of the standout features of the results was the improvement in profitability margins despite declining revenue, suggesting stronger cost management.

Cost of sales declined 12.5% to N112.15 billion from N128.18 billion, broadly matching the pace of revenue decline.

The biggest cost savings came from:

• Natural gas and fuel expenses, which declined to N102.33 billion from N109.17 billion
• Repairs and maintenance costs, which fell sharply to N4.52 billion from N13.99 billion

These reductions limited the decline in gross profit to 11.95%, allowing gross margin to improve.

Administrative expenses, however, increased to N16.71 billion from N14.75 billion, including N8.07 billion in operating, maintenance, and commercial costs.

Even with higher overheads, operating profit in the second quarter increased 31.66% year-on-year to N19.13 billion, reflecting the company’s ability to preserve profitability through operational efficiencies.

Management noted that:

• Gross margin improved to 38.4%
• Operating margin rose to 30.6%
• Pre-tax margin increased to 30.2%

Chief Financial Officer Evans Okpogoro attributed the stronger margins to cost optimization initiatives and disciplined financial management, demonstrating that management has focused on profitability rather than simply pursuing revenue growth.

Lower Finance Costs Provide Support

Another positive feature of the results was a substantial reduction in financing costs.

Finance costs fell to N1.36 billion from N6.41 billion, reducing pressure on earnings.

Finance income also declined, dropping to N1.34 billion from N3.45 billion, reflecting lower returns on cash balances and investments.

Although the reduction in borrowing costs supported profitability, it was insufficient to offset weaker operating performance.

Profit after tax for the first half declined 12.6% to N38.50 billion from N44.05 billion, while earnings per share fell to N5.13 from N5.87.

For the second quarter alone:

• Profit after tax dropped 24.01% year-on-year to N8.80 billion
• Earnings per share fell 46.1% to N0.83 from N1.54, highlighting the weaker quarterly performance.

Balance sheet reflects growing working capital pressure

The results also point to increasing working capital challenges facing Nigeria’s electricity generation companies.

Trade and other receivables climbed to N529.42 billion from N468.57 billion, indicating that larger amounts of revenue remain unpaid.

The increase reflects the persistent liquidity issues across Nigeria’s electricity market, where generation companies often wait extended periods before receiving payments from market participants.

Borrowings also increased significantly.

Total interest-bearing debt rose to N63.63 billion, more than doubling from N30.69 billion at the end of 2025.

Meanwhile, cash and cash equivalents declined sharply to just N667.93 million, compared with N2.22 billion six months earlier.

The combination of rising receivables, higher debt, and lower cash suggests the company has relied more heavily on borrowing to finance operations while awaiting payment for electricity already supplied.

Although the lower finance costs indicate favorable financing terms or debt restructuring, sustained growth in receivables remains an important area for investors to monitor, as delayed collections continue to strain liquidity across Nigeria’s power sector.

Total assets nevertheless expanded 9.86% to N619.02 billion, reflecting continued investment and growth in the company’s asset base.

Management Expects Stronger Second Half

Managing Director and Chief Executive Officer Peter Ikenga said the company remained profitable and operationally efficient despite the transmission challenges experienced during the first half.

He expressed confidence that Transcorp Power would recover lost ground during the remainder of the year and deliver a stronger full-year performance than in 2025.

That outlook will depend largely on improvements in transmission network reliability, which remains outside the direct control of generation companies.

If transmission constraints ease, the company could increase electricity dispatched from existing generation assets without requiring significant new capacity investments, providing an avenue for earnings recovery.

Transcorp Power currently has a market capitalization of approximately N1.84 trillion.

Its shares have declined about 20% year-to-date, falling from N307.00 at the start of 2026 to N245.50 as of July 17. The decline reflects broader investor caution toward Nigerian equities as well as concerns over operational headwinds affecting the power sector.

Nevertheless, the interim dividend announcement may provide support for investor sentiment, particularly among income-focused shareholders, while the improvement in operating margins demonstrates that management continues to exercise tight cost control even as sector-wide infrastructure bottlenecks constrain revenue growth.

Looking ahead, investors are likely to focus on three key issues: the pace of receivables collection, progress in addressing transmission constraints across the national grid, and whether management can translate stronger operating efficiency into renewed earnings growth during the second half of the year.

The U.S. Department of Justice has told federal agencies they can once again allow employees to download TikTok on government-issued devices, reversing a restriction that had been in place since 2022 and marking another significant turn in Washington’s evolving approach to the popular video-sharing platform.

According to Reuters, the Justice Department concluded that the 2022 law banning TikTok from federal devices no longer applies following the completion of a restructuring that transferred control of TikTok’s U.S. operations to a new American-backed joint venture.

The DOJ memo reportedly states that President Donald Trump has authorized “employees of Executive Branch agencies” to download TikTok onto official devices, provided agencies approve the move and users comply with workplace cybersecurity and information technology policies.

The guidance effectively restores discretion to federal departments and agencies, allowing each to decide whether TikTok may be installed on government devices based on its own operational and security requirements.

The policy reversal follows the completion of a long-negotiated ownership restructuring designed to address U.S. national security concerns over TikTok’s ties to China.

TikTok’s U.S. operations are now controlled through a joint venture backed by Oracle, private equity firm Silver Lake, and Abu Dhabi investment company MGX. Oracle serves as the venture’s technology and security partner, overseeing data security and cloud infrastructure, while ByteDance, TikTok’s Chinese parent company, retains a 19.9% ownership stake.

The restructuring represents the latest chapter in a dispute that has stretched across multiple U.S. administrations. Concerns that ByteDance’s ownership could expose Americans’ data to the Chinese government or allow Beijing to influence content recommendations first prompted the federal government to prohibit TikTok on official devices in 2022. Those concerns later expanded beyond government networks. Congress subsequently passed legislation requiring ByteDance to divest TikTok’s U.S. business or face a nationwide ban, arguing that Chinese ownership posed unacceptable national security risks.

The nationwide restrictions briefly took effect early last year, causing TikTok to go offline in the United States for several hours before service was restored after President Donald Trump delayed enforcement while negotiations over a new ownership structure continued.

The latest DOJ guidance indicates that the administration believes the restructuring fundamentally changes the legal and national security considerations that underpinned the original federal-device prohibition.

A Dramatic Policy Shift Under Trump

The decision also reflects a broader evolution in the Trump administration’s handling of TikTok. During his first term, Trump sought to force ByteDance to sell TikTok’s U.S. operations and repeatedly warned that the platform represented a national security threat.

In his current administration, however, Trump has pursued a more pragmatic approach, aiming to preserve TikTok’s availability in the United States while restructuring its ownership to reduce Chinese control. Rather than enforcing an outright ban, the administration has focused on securing American oversight of TikTok’s U.S. operations, data infrastructure and governance.

The DOJ’s interpretation that the 2022 prohibition no longer applies suggests the administration believes those objectives have now been substantially achieved.

The move could also ease operational constraints for federal employees whose agencies rely on social media platforms for communications, public outreach and emergency information dissemination. Several government departments had previously been unable to use TikTok directly on official devices despite the platform’s enormous reach among younger audiences.

Regulatory Scrutiny Remains Far From Over

Despite the latest policy change, TikTok’s legal and regulatory challenges are unlikely to disappear entirely. ByteDance’s continued minority ownership may still attract scrutiny from lawmakers and national security officials who have argued that any continuing Chinese stake could leave room for influence over the platform’s operations or access to sensitive information.

Congress has remained divided over whether the ownership restructuring adequately addresses long-standing security concerns, and lawmakers could continue pushing for stricter oversight of the platform.

Moreover, the DOJ guidance does not automatically restore TikTok across the federal government. Agencies retain the authority to prohibit or restrict the app on government-issued devices if they determine it poses cybersecurity or operational risks.

The decision also applies only to federal government devices and should not be interpreted as ending broader oversight of TikTok. The platform remains subject to continuing national security monitoring under the new ownership structure, and future compliance with U.S. security requirements will likely determine whether the current arrangement remains acceptable.

More broadly, the reversal underpins a shift in Washington’s technology policy. Rather than pursuing outright bans on foreign-owned digital platforms, policymakers are now seeking structural solutions that preserve access to widely used services while attempting to place critical data, infrastructure, and governance under American oversight.

For TikTok, which has more than 170 million U.S. users, the latest decision is seen as a win in its effort to secure a long-term future in the United States.

Global equity funds attracted fresh inflows for an eighth consecutive week through July 15 as easing U.S. inflation, robust corporate earnings and renewed optimism around artificial intelligence encouraged investors to increase exposure to risk assets, although the pace of buying slowed from the previous week.

According to LSEG Lipper data covering 28,904 funds, investors purchased a net $12.46 billion of global equity funds during the week, following a much stronger $48.35 billion of inflows the previous week.

The continued inflows suggest that investors remain constructive on equities despite elevated valuations and lingering geopolitical risks, including tensions involving Iran and uncertainty surrounding global trade. The moderation in weekly purchases appears to reflect profit-taking after the previous week’s surge rather than a broader deterioration in market sentiment.

Europe Leads Equity Inflows As Investors Rotate Globally

European equity funds emerged as the biggest beneficiaries of global investor flows, attracting $9.49 billion, while Asian funds drew $5.4 billion.

In contrast, U.S. equity funds experienced $4.8 billion in net outflows, indicating investors may be rotating geographically after a prolonged period of U.S. market outperformance.

The shift comes as European equities benefit from improving corporate earnings and relatively attractive valuations compared with U.S. stocks, where technology companies continue to dominate market performance and trade at historically elevated multiples.

The strong start to the second-quarter earnings season also helped reinforce confidence in global equities. Several major Wall Street banks, including Bank of America, JPMorgan Chase, and Morgan Stanley, reported stronger-than-expected results, easing concerns that higher interest rates and slowing economic growth would significantly weaken corporate profitability.

Investor sentiment also received a boost from Dutch semiconductor equipment maker ASML, whose quarterly earnings exceeded expectations. The company raised its 2026 outlook and announced plans to expand manufacturing capacity, boosting confidence that investment in artificial intelligence infrastructure remains robust despite earlier concerns that AI spending had outpaced fundamentals.

Technology remained the most popular sector among investors, attracting $3.37 billion during the week. Although that represented the sector’s smallest weekly inflow in three weeks, it demonstrates that AI-related investments continue to dominate equity allocations globally.

Financial sector funds received $567 million in net inflows, supported by strong earnings from major banks, while healthcare funds attracted $558 million as investors continued to seek defensive growth opportunities alongside cyclical exposure.

A key catalyst behind the improved market sentiment was softer-than-expected U.S. inflation data.

June consumer price figures showed headline inflation falling 0.4%, marking the first monthly decline since the COVID-19 pandemic, while core inflation remained unchanged. The report strengthened expectations that the Federal Reserve may not need to resume interest rate increases in the near term.

Lower inflation expectations pushed Treasury yields and the U.S. dollar lower earlier in the week, improving financial conditions and supporting equity valuations.

Although Federal Reserve policymakers cautioned that a single inflation report was insufficient to declare victory over inflation, investors interpreted the data as reducing the likelihood of additional monetary tightening this summer.

Bond Demand Remains Resilient As Cash Leaves Money Markets

Fixed-income funds also continued to benefit from shifting investor allocations. Global bond funds recorded $16.16 billion in net inflows, extending their buying streak to 15 consecutive weeks, underscoring persistent demand for high-quality fixed-income assets even as equity markets continue to rally.

Government bond funds attracted $3.38 billion, marking their strongest weekly inflow since April 8, as investors increased allocations to sovereign debt amid expectations that interest rates may have peaked in several major economies.

Short-duration bond funds also remained popular, drawing $4.17 billion, reflecting continued investor preference for lower-duration assets that offer attractive yields while limiting exposure to future interest rate volatility.

The bond inflows coincided with a sharp withdrawal from money market funds. Investors pulled $102.53 billion from cash funds, the largest weekly outflow since April 15, suggesting capital is increasingly moving out of defensive cash positions and back into both equities and fixed income as confidence in financial markets improves.

Commodity fund flows painted a mixed picture.

Gold and precious metals funds attracted $376 million, ending an eight-week streak of investor withdrawals. Renewed interest in precious metals likely reflected continued geopolitical uncertainty and a weaker U.S. dollar following the inflation data.

Energy funds, however, recorded $145 million in net outflows despite elevated oil prices, indicating that investors remain cautious about the sector’s longer-term outlook amid uncertainty over global economic growth and energy demand.

Emerging markets also showed signs of renewed investor confidence.

Emerging-market equity funds attracted $2.74 billion, ending an 11-week streak of outflows, while emerging-market bond funds recorded $795 million in fresh inflows.

The turnaround suggests investors are gradually rebuilding exposure to developing economies as expectations grow that the Federal Reserve may adopt a less restrictive monetary stance. Historically, easing U.S. monetary conditions tend to support emerging-market assets by reducing pressure on local currencies, lowering financing costs, and encouraging capital inflows.

Together, the latest fund flow data indicate that investors remain broadly optimistic about global markets. Strong corporate earnings, resilient AI-related investment, moderating inflation and expectations of a less aggressive Federal Reserve continue to underpin demand for both equities and bonds.