IHS Holding's Earnings Boosted by Strong Fundamentals and Free Cash Flow.

IHS Holding reported strong earnings with a healthy accrual ratio of -0.22, indicating that statutory earnings were less than free cash flow. Free cash flow improved over the last year, and statutory profit was boosted by unusual items worth $72m. Assuming these unusual items don't repeat, profit is expected to be weaker next year.

IHS Holding Ltd (IHS) reported robust earnings for the second quarter ended June 30, 2025, with adjusted earnings per share (EPS) of 10 cents, beating the mean analyst expectation of 5 cents and the Wall Street range of -3 cents to 17 cents [1]. The company's revenue decreased by 0.5% year-on-year to $433.3 million, compared to analysts' expectations of $417.83 million. Despite the revenue decline, IHS Holding's adjusted EBITDA margin remained stable at 57.3% [2].

The company's net income for the quarter was $32.3 million, a significant improvement from the same period last year. This strong performance was driven by organic growth of 11.1%, with constant currency growth of 9.9% and a net benefit from foreign exchange resets and power indexation [2]. IHS Holding also benefited from unusual items worth $72 million, which boosted statutory profit. However, the company's accrual ratio of -0.22 indicates that statutory earnings were less than free cash flow, suggesting that the unusual items may not recur in the future [1].

Free cash flow improved over the last year, reaching $54.0 million, a 19.2% decline from the previous quarter. This decline was primarily due to a re-phasing of interest payments following a bond refinancing in November 2024 [2]. The company's capital expenditure (Capex) decreased by 13.8% year-on-year to $46.3 million, reflecting actions taken to improve cash flow generation.

IHS Holding's full-year 2025 guidance was raised due to strong year-to-date performance. The company expects revenue growth of approximately 11% year-on-year, driven by increased constant currency growth and positive foreign currency exchange rate movements. The company also expects improved profitability and ALFCF cash conversion rate, driven by continued financial discipline [2].

The company's shares have seen significant growth this year, with a 130.8% increase so far in 2025 and a 21.2% increase in the second quarter. Analysts have a "buy" recommendation for the stock, with a median 12-month price target of $7.00 [1].

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L8N3U4149:0-ihs-holding-ltd-reports-results-for-the-quarter-ended-june-30-earnings-summary/
[2] https://www.theglobeandmail.com/investing/markets/stocks/IHS-N/pressreleases/34070356/ihs-holding-limited-reports-second-quarter-2025-financial-results/