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NAHCO eyes N35bn turnover in new strategic growth plan

NAHCO eyes N35bn turnover in new strategic growth plan

Nigerian Aviation Handling Company (NAHCO aviance) Plc plans to grow its profit by 323.3 percent to N2.13 billion in 2019 as the management of the company assured that ongoing strategic initiatives would deliver significant growths over the next five years.
The management of the company presented the underlying facts behind the operations of the company to capital market stakeholders Tuesday at the Nigerian Stock Exchange (NSE).

Group Managing Director, Nigerian Aviation Handling Company (NAHCO aviance), Olatokunbo Fagbemi, said new investment in ground support equipment, strategic investments in infrastructure and human capital development and improving operational efficiency at the airports would drive considerable growths this year and the years ahead.
She outlined that the company would achieve a turnover of N13.27 billion in 2019 as against N9.88 billion in 2018 while profit before tax is expected to rise from N503 million in 2018 to N2.13 billion in 2019. Profit after tax is projected to rise to N1.81 billion.

Over the next five years, the company expects its revenue to rise steadily from N9.8 billion in 2018 to N13.269 in 2019. From 2020 to 2023, the company’s revenue projections stood at N16.916 billion, N21.567 billion, N27.495 billion and N35.054 billion, respectively.
She assured the investing public that the company is confident of paying nothing less than 25 kobo dividend per share noting that the company expects to see a significant impact of its transformation agenda on its performance as from the third quarter given the seasonal nature of the aviation business.
“We can assure you that we will achieve our targets in 2019. We believe we can achieve our forecasts. We had thought deeply about the figures and put everything in place to ensure we achieve the forecasts. We stand by the forecasts that we have and we believe we will achieve them,” Fagbemi said.

She pointed out that the company has already invested about N2 billion on new equipment and plans to increase such investment to more than N3 billion by the end of this business year.
She noted that new investments in equipment will particularly help to reduce operations cost, which was largely due to infrastructure failure at the airport and aging equipment that lead to increased maintenance cost.
She said with the injection of new ground support equipment and ongoing improvement of airport facilities, operating cost would reduce substantially, enabling the company to pass its steady revenue growth to shareholders.
“We are deliberate and focused on improving and turning around the company. We will focus majorly on strategic initiatives that will deliver operational efficiency and impact the bottom-line,” Fagbemi said.

According to her, NAHCO aviance has been well positioned to take advantage of the positive growth potential of the aviation industry in Africa and Nigeria as NAHCO, which controls 63 percent of the Nigerian market, has remained a preferred handler for the mail and cargo traffic in the country. Mail traffic increased by 19.96 percent in 2018 compared with 2017 while international air cargo and domestic cargo rose by 3.5 percent and 1.94 per cent respectively.
She said the company has continued to invest in various businesses to expand and diversify its revenue base and deliver improved returns to shareholders. In line with this, Nahco established Nahco Free Trade Zone Limited, the first airport-based free trade zone in Nigeria. It also established NAHCO Energy & Infrastructure Limited to tap into the opportunities in the power and infrastructure sectors of the economy. Another subsidiary, Mainland Cargo Options Limited seeks to harness opportunities of the air, land and sea logistics.

Fagbemi said the management of the company is not unmindful of the challenges in the operating environment such as liberalisation of the Nigerian market, increased competition, pricing pressures, and business model obsolescence, the company has put enough measures in its growth plan to mitigate the possible risks and ensure stable growth in the years ahead.
She noted that while the company will in the immediate period support its growth with long-term loans, it may consider accessing the capital market to raise long-term funds to support its long-term growth.

She noted that the transformation agenda became necessary after a review of NAHCO’s business process in December 2018 pointing out that the strategic pillars of the company’s growth plan are operational excellence, digital transformation, people and culture transformation, organic and inorganic growth and diversification.
“One of the things we are looking at is that our business, if you take mainland cargo option for example, we are a logistics company and one of the first things that happen when I came is that since logistics is not just about the air, it is also about land and sea, our focus now is how do we diversify our business to begin to look at the other mode of transportation. Aviation is just a part of the transport system,” Fagbemi said.
On the company performance, she stated that the company has aviation market share of 63 percent, with 36 airlines serviced, 15 airport served and 1,668 employees.