Surging operating expenses weaken Nahco Aviance growth prospect

The surge in operating expenses has weakened the growth potentials of Nigeria aviation and handling giant, Nahco Avince, financial statement released on its website shows.

For the nine months through September 2014, the company’s pretax profit reduced by 5.10 percent to N828.45 million, while sales increased 4.08 percent to N6.02 billion.

The reduction in pretax profit was fuelled by increased operating and production costs, which analysts attribute to increase in staff strength and purchase of vehicles to distribute cargoes within the airport.

Nahco’s distribution and administrative were up by 7.81 percent to N1.86 billion in Q3 2014, as against N1.72 billion last year, while operating expenses margin remained flattish at 30 percent.

Similarly, cost of sales were up by 6.52 percent to N3.76 billion compared with N3.53 billion as cost of sales margin remained flattish at 62 percent.

The company couldn’t control direct costs attributable to projects as gross profits grew marginally by 0.26 percent to N2.26 billion in Q3 2014, from N2.25 billion the preceding year.

Nahco Aviance, in partnership with the Nigeria Export Promotion Council (NEPC), the Nigeria Agriculture Quarantine Service (NAQS) and the Lagos State government, came together to address the challenges facing the export of horticulture products, fresh and processed food items from Nigeria by assessing the company’s operations that could help facilitate the bodies efforts at expanding Nigeria export of foods towards meeting the growing demands of European Union and the United States of America’s markets of fresh and processed food items from Nigeria.

It would be recalled that the company had reached agreement with the Nigeria Customs Service to extend its hours of operations at the Lagos airport cargo complex.

This is to ensure prompt facilitation of cargos that would reduce stockpiling of cargo at the tarmac and bulk breaking areas and lead to maximisation of cargo potentials, thus expediting on timely delivery to customers.

Nahco’s operating profit reduced by 5.24 percent to N977.30 million from N1.03 billion the preceding year, while finance charges reduced to N148.8 million as against N158.4 million last year.

The company’s share price closed at N4.66 on the floor of the NSE, while market capitalisation was N6.88 billion.

 

BALA AUGIE