SAHCOL: Revenue Growth in H1 2026 Swallowed by Surging Costs and Margin Pressure

Skyway Aviation Handling Company Plc closed H1 2026 with growth at the top line but pain at the bottom. Revenue rose 9.2% to ₦23.01bn, driven by a 44.2% jump in Cargo-Import handling to ₦5.54bn and steady passenger handling at ₦16.45bn. Yet profit after tax collapsed 52.7% to ₦3.85bn, and earnings per share fell to 284 kobo from 601 kobo a year earlier. The headline growth masks a deeper margin problem.

The weakness is cost. Direct costs surged 63.1% to ₦10.75bn and administrative expenses climbed 41.3% to ₦6.58bn. Gross margin compressed from 68.7% to 53.3% in 12 months. The biggest pressure points were equipment repairs, up 117.8% to ₦2.37bn, equipment running costs up 203% to ₦1.10bn, and direct labour up 53.9% to ₦2.58bn. With 2,626 employees, up 30.2% YoY, and staff costs now 22.5% of revenue, inflation in wages, spares, diesel and maintenance has outpaced pricing power.

Threats compound this. SAHCOL remains heavily exposed to FX and import inflation. Spares, oil, lubricants and ground support equipment are dollar-linked, and the company booked another ₦14.8m FX loss in H1. Regulatory risk is also high. Concession fees to FAAN hit ₦1.15bn, and operations are concentrated at MMIA Lagos. Any change in concession terms or the entry of new ground handlers can erode share. Receivables are another drag at ₦20.1bn, with ₦1.37bn tied to related SIFAX group companies, raising collection and governance questions. Cash also weakened, falling 16.2% to ₦3.86bn despite strong operating cashflow, because of heavy capex and a doubled dividend payout of ₦1.62bn.

How strengths were deployed to fight back

SAHCOL leaned on its balance sheet to neutralize these pressures. The company’s biggest strength is its asset base and cash generation. Total assets rose 63.4% YoY to ₦86.55bn after the 2025 PPE revaluation, and equity stands at ₦64.42bn. That strength funded a ₦6.76bn capex programme in H1, almost double the ₦3.69bn spent in H1 2025. The idea is clear: replace old, repair-heavy equipment with new assets to bring down the ₦2.37bn repair bill and ₦1.10bn running costs over time.

Operating cashflow was also deployed defensively. Despite profit falling, cash from operations jumped 77.5% to ₦7.97bn, helped by flat receivables and better working capital. Management used that cash to cut borrowings by 15.6% to ₦3.25bn and to fund investments without adding expensive debt. The BOI loan at 9% remains in place, but no new expensive borrowing was taken. This protected the company from rising interest rates while it absorbed cost inflation.

Exploiting opportunities

The clearest opportunity being exploited is cargo. With e-commerce and imports growing, SAHCOL pushed Cargo-Import revenue up 44.2% YoY. The company’s bonded warehouses in Lagos, Kano, Abuja and PH, plus the Hermes system, give it an edge that competitors cannot replicate quickly. Passenger handling also held firm at ₦16.45bn, showing resilience in core airline contracts.

Beyond cargo, SAHCOL is using its infrastructure to diversify. Other operating income rose 60.8% to ₦349m, driven by rental income from investment properties and ancillary services like VIP lounges and premium services. The ₦53.78bn PPE base and MMIA Cargo Terminal location give it the platform to pitch more non-aeronautical revenue to airlines and logistics firms.

The company also used its strong equity to maintain shareholder confidence. Despite lower profit, it paid ₦1.62bn in dividends, double last year’s, and kept free float at 20.07%, compliant with NGX Main Board rules. With Deloitte as auditor and full board certifications, governance remains a selling point to institutional investors.

The verdict
H1 2026 shows a company in transition. SAHCOL’s weaknesses — margin compression, cost inflation and cash drain — are real and were the story of the period. Its threats — FX, regulation and receivables — have not gone away.

But the strengths were deployed deliberately: using a strong balance sheet to fund capex aimed at lowering future costs, using operating cashflow to de-lever, and using market position to grow cargo and ancillary revenue. If the new equipment delivers efficiency and cargo growth continues, the margin pressure should ease in 2027.

For now, SAHCOL is growing revenue and investing for the future. It just hasn’t yet turned that growth into profit.