Skyway Aviation Handling Company (SAHCO) Plc recorded a sharp decline in profitability in the first half of 2026 as rising operating and administrative costs offset revenue growth, underscoring the mounting cost pressures facing Nigeria’s aviation ground handling industry.
The company’s unaudited financial results for the six months ended June 30, 2026, show that revenue increased by 9.25 per cent to N23.01 billion from N21.06 billion in the corresponding period of 2025. However, the higher turnover failed to translate into stronger earnings as escalating direct operating costs and finance expenses significantly compressed margins.
Pre-tax profit fell by 41.49 per cent to N5.83 billion from N9.96 billion recorded a year earlier, while profit after tax declined more sharply by 52.73 per cent to N3.85 billion. Earnings per share also dropped to 284 kobo from 601 kobo in the first half of 2025.
Growth in revenue was largely driven by stronger import cargo handling, which rose 44.19 per cent to N5.54 billion and accounted for about a quarter of total revenue. Passenger handling and related services remained SAHCO’s largest business segment, contributing over 71 per cent of total revenue after recording a modest 2.38 per cent increase to N16.45 billion. Export cargo handling, however, declined by 11.37 per cent to N1.02 billion.
Despite the improved top-line performance, direct operating costs surged by 63.07 per cent to N10.75 billion, pushing the direct cost-to-revenue ratio to 46.73 per cent from 31.31 per cent in the corresponding period last year. Consequently, gross profit fell by 15.28 per cent to N12.26 billion, while the gross profit margin narrowed significantly from 68.69 per cent to 53.27 per cent.
The increase in costs was driven primarily by higher expenditure on equipment maintenance, labour and operational activities. Equipment repair costs more than doubled to N2.37 billion, direct labour expenses rose by 53.9 per cent to N2.58 billion, while equipment running costs increased by over 200 per cent to N1.10 billion.
Administrative expenses also climbed sharply, rising 41.25 per cent to N6.58 billion, resulting in operating profit falling by 39.91 per cent to N6.02 billion. The operating margin consequently declined to 26.18 per cent from 47.60 per cent recorded in the same period of 2025.
Profitability weakened further during the second quarter as revenue grew by just over six per cent while direct costs increased by more than 65 per cent, causing quarterly pre-tax profit to decline by over 50 per cent.
Finance income improved to N133.91 million, but higher borrowing costs pushed finance expenses to N331.11 million, leaving net finance costs nearly three times higher than the previous year. A higher effective tax rate of 34.01 per cent also contributed to the steeper decline in net earnings.
Despite the earnings pressure, SAHCO strengthened its asset base, with total assets expanding by 63.4 per cent to N86.55 billion, largely reflecting investments in property, plant and equipment, which now account for more than 62 per cent of total assets.
Liquidity, however, weakened during the period. Current assets declined to N26.02 billion, while current liabilities rose to N14.81 billion, reducing the company’s current ratio from 3.20 to 1.76 and significantly lowering working capital. Cash and cash equivalents also declined to N3.86 billion, while trade receivables remained elevated at N20.11 billion.
Although total borrowings fell by 26.01 per cent to N3.25 billion, SAHCO shifted towards shorter-term debt, with short-term borrowings doubling year-on-year. The company nevertheless maintained a net cash position, reflecting a relatively conservative balance sheet.
The results suggest that while SAHCO continues to invest aggressively in expanding its operational capacity, those investments have yet to generate commensurate returns. Returns on assets and equity remained modest during the period, indicating that rising operating costs continue to weigh on profitability despite sustained revenue growth.
Investor sentiment, however, remained resilient. SAHCO’s shares closed July at N171.20, preserving a year-to-date gain of 93.56 per cent as the market maintained confidence in the company’s long-term growth prospects despite the softer half-year performance.
