NAHCO profit margin hits 7-yr high despite hurdles

Nigerian Aviation Handling Company (NAHCO), an aviation ground handling service provider recorded a 16.7 percent profit margin which implies profitability despite accelerating inflation, BusinessDay analysis show.

The firm’s profit after tax rose to N2.73 billion in the full year of 2022, 253 percent from N771.61 million in the same period of 2021.

NAHCO’s total revenue stood at N16.37 billion which comprises revenue from contracts with customers at N10.87 billion and other revenue at N6.15 billion.

The firm saw a 60 percent year-on-year growth in revenue to N16.37 billion in December 2022 from N10.23 billion in December 2021.

Last year, Nigeria’s aviation sector grappled with a lot of challenges ranging from hikes in JetA fuel and airfare; regulatory, institutional and structural challenges; challenges of poor infrastructure; poor access to financial incentives; inability to repatriate funds; as well as underfunding of the industry.

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Operating costs surged 35.2 percent to N9.32 billion in December 2022 from N6.89 billion in December 2021 while Other operating costs increased to N713.04 million, up 157 percent from N276.7 million in the comparable period.

Administrative expenses rose to N3.54 billion, a 39 percent increase from N2.55 billion in December 2021 while the firm’s other administrative expenses saw a similar increase to N283.7 million, a 47.5 percent increase from N192.26 million in the period reviewed.

The firm paid N1.05 billion as company income tax, up 452 percent from N190.14 million. With education tax which dipped 99 percent to N466 thousand from N47.35 million in the comparable period.

Finance income surged to N108.48 million, up 83 percent from N59.33 million with a total finance expense that totaled N118.56 million, a 36 percent decline from N187.1 million.

Finance income stood at N108.48 million with a finance expense at N118.56 million which led to net finance costs amounting to N80.08 million in December 2022, up 37 percent from N127.76 million in December 2021.

Nigerian Aviation Handling Company VAT Payable grew to N283.35 million in December 2022, up 19.5 percent from N352.28 million in December 2021 while the amount due to Government agencies dropped 10 percent to N133.73 million from N148.26 million in the comparable period.

Trade and other payables grew by 1 percent to N5.49 billion from N5.43 billion on the back of other payables 16 percent year-on-year increase.

Cash and cash equivalents for the period stood at N2.67 billion, it entails bank and cash balances which amounted to N1.95 billion, domiciliary accounts amounted to N384.05 million, fixed deposits at N335.4 million with impairment of short-term deposits at N345,000 in the period ended December 2022.

According to the company, included in short-term deposits is the investment placed for unclaimed dividends as of December 31, 2022. Short-term deposits are made for varying periods between one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.

Inventories grew to N477.34 million in December 2022, a 65 percent increase from N288.5 million in December 2021. The firm inventories had N335.85 million spare parts, general & medical amounted to N67.23 million, and diesel & Lub. was worth N74.25 million in December 2022.

Nigerian Aviation Handling Company invested the most in Nahco Energy and Power Limited which was N25.5 million, followed by Nahco FTZ Limited which at N10 million, while Mainland Cargo Options Ltd obtained an N4 million share.

Prepayments dipped 14 percent to N1.93 billion from N2.24 billion in the comparable period. The firm’s prepayment comprised of deposit for property & equipment(N1.72 billion), prepaid insurance(N42.49 million), prepaid stock(N10.77 million), and others(N153.23 million) for the period ended December 31 2022.

Basic earnings per share amounted to N140 from January to December 2022 from N46 in the same period of 2021