NAHCO Grew Revenue 31% In Q3, But Its Profit Is Now Being Paid For By Its Suppliers
NAHCO Aviance has just reported nine months in which it sold more handling services than ever before, earned more profit than ever before, and yet generated less cash from its operations than last year. For the nine months ended 30 September 2026, Group revenue rose 16.5% from N47.76 billion to N55.64 billion, with third quarter revenue alone rising 31.5% from N15.43 billion to N20.29 billion, profit from operations rose 19.4% from N18.14 billion to N21.67 billion, profit before tax rose 18.4% from N17.94 billion to N21.24 billion, and profit for the period rose 19.2% from N13.46 billion to N16.04 billion, with earnings per share up 19.2% from 604 kobo to 720 kobo. That headline looks like a company in full flight, but underneath it net cash from operating activities fell 11.3% from N16.79 billion to N14.90 billion, gross margin fell 380 basis points from 54.4% to 50.6%, and in the third quarter alone gross margin fell 890 basis points from 54.9% to 46.0% and operating margin fell 730 basis points from 42.2% to 34.9%, which means NAHCO is growing faster and keeping less on each job, and the question for shareholders, airlines, staff, regulators and suppliers is whether its strengths are strong enough to exploit the aviation boom in front of it, neutralise the cost and collection pressures behind it, and still deliver what each stakeholder expects.
The first strength NAHCO deployed was its market position and diversified handling platform, and it used it to exploit the surge in aviation traffic that is visible in the third quarter numbers. The Group is not a single-service handler, it provides aircraft handling, cargo handling, passenger handling, passenger profiling, crew transportation, energy and power distribution and leasing of ground handling equipment, with its main base at Murtala Muhammed International Airport, Ikeja, and total assets of N58.85 billion, property, plant and equipment of N26.08 billion and right-of-use assets of N2.12 billion to deliver that service. When traffic jumped in the third quarter, NAHCO was able to take more flights, more cargo and more passengers without having to build a new business, and that is why revenue jumped 31.5% in three months, far faster than the 16.5% for nine months, and why other income also jumped 120.9% from N0.35 billion to N0.78 billion, as rent, disposal gains and ancillary services rose alongside core handling. That same platform gave it an opportunity to cross-sell, because an airline that uses NAHCO for aircraft handling can also be sold cargo handling, passenger profiling and crew transport, and the Group’s deferred income of N1.31 billion and rent received of N0.48 billion show that it is already monetising its property and leasing capacity alongside handling. If NAHCO had been a narrow handler, the traffic boom would have passed it by, but because it had the breadth, the equipment and the airport presence, it captured the boom, and that is a strength deployed well.
The second strength NAHCO deployed was ruthless control of overheads, and it used it to neutralise the weakness that threatened to destroy its profit, which was the surge in direct operating costs. Operating costs rose 26.1% from N21.79 billion to N27.47 billion, from 45.6% of revenue to 49.4% of revenue, driven by fuel, spare parts, labour and airport charges, and that alone should have cut operating profit. NAHCO neutralised it by cutting administrative expenses by 18.3% from N8.18 billion to N6.68 billion, from 17.1% of revenue to 12.0% of revenue, which saved N1.49 billion and allowed operating profit margin to actually rise 90 basis points from 38.0% to 38.9% for nine months and EBITDA margin to rise 160 basis points to 43.5%, with EBITDA of N24.18 billion. That is not a small feat, because it means management did more with less at head office while operations handled 31.5% more revenue in the third quarter, and it shows a capability to reallocate resources quickly. The same discipline is visible in finance, where finance costs fell 19.7% from N1.57 billion to N1.26 billion as debt was repaid, and interest cover rose from 11.5 times to 17.1 times on operating profit and to 19.1 times on EBITDA, which means the Group is now paying less to borrow and can survive a rise in rates. That overhead discipline is the reason profit grew faster than revenue for nine months, even though gross profit grew only 8.5% from N25.97 billion to N28.17 billion, and it is the clearest evidence that NAHCO knows how to use its strength to protect profit when direct costs rise.
The third strength NAHCO deployed was its balance sheet, and it used it to neutralise the threat of debt and to create room to exploit future opportunities. At 31 December 2025 total interest-bearing borrowings were N5.47 billion, with N1.21 billion in non-current borrowings, but by 30 September 2026 total borrowings had fallen 39.2% to N3.33 billion and non-current borrowings had gone to nil, borrowings to equity had fallen from 21.1% to 11.2%, total equity had risen 14.8% to N29.86 billion, retained earnings had risen 16.6% to N27.10 billion, equity ratio had improved from 47.2% to 50.7%, and total liabilities to equity had fallen from 112.0% to 97.1%. The Group also repaid N1.67 billion of loans in the period and paid N0.62 billion of lease payments, while lease liabilities fell 12.2% to N2.17 billion, and it ended with a net cash position of N6.19 billion on a statement of financial position basis, with cash of N9.52 billion against borrowings of N3.33 billion. That deleveraging was not accidental, it was a deliberate deployment of profit to reduce risk, and it gives NAHCO headroom to borrow again for new ground support equipment, cold chain facilities, cargo warehouses and digital systems without breaching covenants, and to survive a downturn in aviation. In a sector where many handlers are over-leveraged, NAHCO’s decision to become net cash positive is a strategic strength, and it is what allows it to consider expansion while others are still servicing debt.
The weaknesses and threats that NAHCO has not yet neutralised are, however, serious, and they explain why the critical judgment on this company cannot be unqualified praise. The first weakness is gross margin, because even after the admin saving, the fact that operating costs grew 26.1% while revenue grew 16.5% means the core handling job is becoming less profitable, and in the third quarter the deterioration accelerated, with gross margin down 890 basis points and operating margin down 730 basis points, which suggests that the admin saving has already been used up and that further cost inflation will now hit operating profit directly. The second weakness is collection, because trade and other receivables jumped 32.6% from N11.13 billion to N14.76 billion, receivables days rose from 64 to 73 days annualised, expected credit losses of N0.60 billion were charged against nil last year, with N0.30 billion in the third quarter alone, and prepayments jumped 184.8% from N1.25 billion to N3.56 billion, tying up N2.31 billion of cash. That is why operating cash flow fell 11.3% to N14.90 billion despite profit rising 19.2%, and why operating cash now covers only 92.9% of profit, down from 124.8%, and why cash on the balance sheet fell 15.0% to N9.52 billion. NAHCO has partly neutralised this by stretching its own suppliers, with trade and other payables jumping 31.0% to N15.43 billion and payables days at 154 days, which funded the receivables gap, but that is not a strength, it is a transfer of pressure to suppliers, and if suppliers tighten credit, NAHCO will face a liquidity squeeze. The third weakness is investment, because capital expenditure was cut 55.0% from N4.52 billion to N2.03 billion, only 3.7% of revenue against 9.5% last year, and depreciation of N2.33 billion exceeded capex, so property, plant and equipment actually fell from N26.38 billion to N26.08 billion, which means the fleet is ageing while traffic is rising 31.5%, and that is a threat to reliability, safety and service quality that no amount of admin saving can offset for long. The fourth threat is net finance cost, because finance income fell 39.1% to N0.83 billion while finance costs fell only 19.7%, so net finance cost rose 111.1% to N0.43 billion, and tax paid jumped 45.1% to N5.58 billion, which together will compress net margin if they continue.
What it means in practice for its profit to now be paid for by its suppliers is that NAHCO Aviance, the trading brand of Nigerian Aviation Handling Company Plc, has just reported nine months to 30 September 2026 in which it sold more handling services than ever before, with revenue up 16.5% from N47.76 billion to N55.64 billion and profit up 19.2% from N13.46 billion to N16.04 billion, yet its profit is now in effect being paid for by its suppliers because it is booking profit on paper faster than it is collecting it in cash from its customers, as trade and other receivables jumped 32.6% from N11.13 billion to N14.76 billion and collection days rose from 64 to 73 days while prepayments jumped 184.8% from N1.25 billion to N3.56 billion and tax paid jumped 45.1% to N5.58 billion, which is why net cash from operating activities fell 11.3% from N16.79 billion to N14.90 billion and now covers only 92.9% of profit down from 124.8% even though profit rose, and the gap was plugged not by customers paying faster but by NAHCO delaying payment to its own suppliers, with trade and other payables jumping 31.0% from N11.78 billion to N15.43 billion and payables days stretching to 154 days, meaning customers now hold NAHCO’s cash for 73 days while NAHCO holds suppliers’ cash for 154 days and the 81-day difference is free, interest-free funding from suppliers that allowed NAHCO to still show N16.04 billion of profit, pay N12.18 billion of dividends, repay N1.67 billion of loans and end with a net cash position of N6.19 billion, but which is fragile because if suppliers tighten credit, demand cash on delivery or stop supplying fuel and spare parts, NAHCO would have to find N15.43 billion quickly while still waiting to collect N14.76 billion from customers, and that is why the real test is not whether it can grow revenue by 31.5% in a quarter as it did in Q3, but whether it can collect that revenue faster, bring receivables days back from 73 to 64 days to release about N1.80 billion, and make its profit be paid for by its customers again rather than by its suppliers.
Whether NAHCO consequently delivered stakeholder expectations depends on which stakeholder is asked, because the delivery is uneven. Shareholders got the most, with EPS up 19.2% to 720 kobo, annualised EPS of 960 kobo, dividends paid up 5.2% to N12.18 billion, payout ratio falling from 86.0% to a still-high 76.0% but leaving more retained profit, book value per share up 14.8% to N13.40, share price up 41.6% to N150.00, market capitalisation up 62.1% to N334.13 billion, and free float compliant at 57.13% with free float value of N190.88 billion, which means the market has re-rated NAHCO from a P/E of 13.2 times to 15.6 times. That is a clear delivery, and it explains why the bonus issue of 139.22 million shares, one for fourteen, from share premium, was well received, because it increased liquidity without diluting value. Airlines and cargo customers got a handler that handled 31.5% more volume in the third quarter without collapsing, and that kept their flights moving, but they also got a handler whose receivables are rising and whose fleet is ageing, which raises the risk of delays if equipment fails. Employees got a company where profit rose 19.2% and admin costs fell 18.3%, which suggests they delivered more with less, but also suggests they are being asked to do more without a proportional rise in resources, and that cannot continue without investment in people and training. Suppliers got a company that paid them more slowly, with payables up 31.0% and 154 days of payment, which is not delivery but deferral, and if that continues suppliers may demand cash on delivery. Lenders and lessors got a company that repaid debt, reduced borrowings by 39.2%, and improved interest cover to 17.1 times, which is full delivery. Regulators and the NGX got a company that is compliant on free float, that paid N5.58 billion in tax, that carries current tax liabilities of N6.00 billion, and that has an equity ratio of 50.7%, which is a solid buffer for the system.
The critical judgment is that NAHCO has deployed its strengths well to exploit the aviation boom and to neutralise the immediate threat of debt and overheads, and it has delivered strongly for shareholders and lenders, but it has not yet neutralised the two threats that will determine its future, which are direct cost inflation and cash collection. If it can use its net cash position and its market rating to renegotiate tariffs with airlines, collect its N14.76 billion of receivables faster, bring receivables days back from 73 to 64 days to release about N1.80 billion of cash, and reinvest that cash in ground support equipment to restore gross margin toward 54%, then the 31.5% third quarter revenue growth will become sustainable profit growth and stakeholder expectations will be met in full. If it continues to fund profit by cutting capex by 55.0%, stretching suppliers to 154 days, and paying out 76.0% of profit as dividend while operating cash falls, then the strengths that made it successful will erode, the third quarter margin compression will become the new normal, and the market that now values it at N150.00 will quickly ask why a company that sells 31.5% more in a quarter keeps only 13.5% more profit.
