Julius Berger Nigeria Plc has leased its cashew processing plant to Eko Organic Food Industries Limited, moving to sharpen its focus on core construction.
The deal was announced in a filing to the Nigerian Exchange (NGX), signed by company secretary C.E. Madueke. The board approved the move at its September 24 meeting.
The lease comes just three years after Julius Berger inaugurated the cashew plant in Epe, Lagos. The plant was celebrated then as the cornerstone of its diversification strategy into agro-processing.
A Shift in Strategy
In 2019, the construction giant first spoke of plans to enter agribusiness as a way to balance revenue streams. By 2022, it had invested in cashew processing, aiming to add value to Nigeria’s growing cashew sector.
Now, the company says leasing the plant will allow continuity in the agro-processing venture, while freeing Julius Berger to focus on what it knows best.
“The goal of the Board of Directors and the Executive Management of Julius Berger remains to deliver on the strategy of maintaining and strengthening the company’s competitive advantages in the construction sector, and any other sector it ventures into,” the statement said.
The lease shows how capital-intensive agro-processing can be, especially in a country where poor infrastructure and unstable policies often make agribusiness risky.
Still, Nigeria remains the sixth largest producer of cashews globally, according to the World Bank.
Confidence in Market Reaction
Julius Berger believes the arrangement with Eko Organic will be well received. The company said the lease “reflects its commitment to repositioning and regional expansion.”
Eko Organic is expected to keep the plant running, preserving jobs and ensuring value addition continues in the cashew sector. The deal, Julius Berger added, was reached on “mutually agreed terms.”
Some investors may welcome the decision, seeing it as discipline from a company that refuses to lose sight of its roots.
But for Julius Berger, its foray into agro-processing was a significant departure from its core construction business. However, with its decision to refocus on construction, it has regained its primary strength even while it doesn’t entirely rule out future partnerships in other sectors, particularly agro-processing, where the giant can leverage its existing infrastructure and expertise through collaborations.
So, should Julius Berger have stayed longer in agro-processing to see it through, or was the lease restrategising the right call?
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