The Nigerian Aviation Handling Company Plc (nahco aviance), a leading aviation ground handling service provider in the country, saw its full-year 2018 profit hit its lowest level in thirteen (13) years despite growing sales by almost a quarter.
The after-tax profit of the aviation services firm fell by 75 percent in full-year 2018 to N196.79 million from N775.77 million recorded in the previous year, making it the company’s worst financial performance since 2005 when the Federal Government of Nigeria sold its 60 percent stakes in the firm through privatisation.
NAHCO’s 2018 financial performance was largely driven by a N306 million it paid on income tax, which rubbed off its N503 million pre-tax profit, as against N175.76 million income tax credit it enjoyed a year earlier.
As a result, the Board of Directors of the company has recommended a final dividend pay-out of 25 kobo per ordinary share for its owners and would be paid to shareholders whose names appear in the register of members as at the close of business on Monday July 8, 2018, the company said in a notice filed at the Nigerian Stock Exchange (NSE).
A look at the aviation ground handling company’s top line reveals that sales rose by 24 percent N9.83 billion in 2018 from N7.93 billion recorded in the previous year, but a 19 percent increase operational costs to N6.66 billion impeded its gross profit growth, causing it to record N3.17 billion compared to N2.31 billion.
In spite of this, the company’s gross margin improved from 29 percent in 2017 to 32 percent in 2018. Operating profit slumped 20 percent to N502 million from N631 million achieved in the previous year.
The significant drop in NAHCO profit pulled its net income margin down to 2 percent in the year as against 9.78 percent recorded in 2017, implying the company could only retain N2 as profit out of every N100 it generated from sales in the year.
Consequently, the earnings per share of the aviation firm, a profitability metric that shows the portion of a company’s profit allocated to each unit of its stock, declined to N12 from N48.
Total assets rose marginally by a percentage point to N12.35 billion in the year compared to N12.26 billion recorded a year earlier. Also, total liabilities soared 10 percent to N6.02 billion from N5.49 billion, causing shareholders’ fund to take haircut by 7 percent to N6.32 billion from N6.77 billion.
A further analysis into the company’s financials reveals the firm is not using its assets and also shareholders’ equity to generate enough return. Return on assets was down to 1.59 percent in 2018 as against 6.32 percent recorded in 2017, while return on equity plunged to 3.1 percent from 11.45 percent.
Meanwhile, NAHCO’s shares dropped 1.49 percent after the close of trade at the Lagos bourse on Thursday, April 18 to hit N3.30, this is the stock’s lowest share price in more than two months.
Earlier this year, Godsmart Nigeria Limited, the single majority shareholder of NAHCO expanded its shareholding in the aviation services firm to 26.95 percent. This followed a transfer of all 97.45 million ordinary shares of Lufthansa Commercial Holding GmbH, which represents 6 percent shareholding in NAHCO, to Godsmart Nigeria Limited.
OLUWASEGUN OLAKOYENIKAN
