NASCON grew sales 4%, profit jumped 28%. Something changed

NASCON Allied Industries Plc reported a profit before tax of N29.70 billion for the first half of 2026, representing a 27.59% year-on-year increase, as stronger operating margins, higher finance income and lower borrowing costs boosted an otherwise modest revenue growth.

The salt producer posted revenue of N81.16 billion, up 3.84% from N78.16 billion recorded in the corresponding period of 2025.

Profit after tax also rose 25.68% to N19.60 billion during the period, according to the company’s unaudited financial statements for the six months ended June 30, 2026, filed with the Nigerian Exchange (NGX) on Wednesday, July 29, 2026.

The improved earnings came despite modest revenue growth, with turnover increasing 3.84% to N81.16 billion, while gross profit climbed 9.15% to N40.81 billion.

Basic earnings per share rose 25.74% to 1,451 kobo from 1,154 kobo, while shareholders’ equity increased 4.76% to N74.57 billion.

Key highlights (H1 2026 vs H1 2025)

• Revenue: N81.16 billion, up 3.84% YoY
• Profit before tax: N29.70 billion, up 27.59% YoY
• Profit after tax: N19.60 billion, up 25.68% YoY
• Cost of sales: N40.35 billion, down 1.03% YoY
• Gross profit: N40.81 billion, up 9.15% YoY
• Operating profit: N24.53 billion, up 15.01% YoY
• Finance income: N5.35 billion, up 125.83% YoY
• Finance cost: N171.61 million, down 58.46% YoY
• Administrative expenses: N5.48 billion, up 21.10% YoY
• Total assets: N161.56 billion, up 19.45%
• Total liabilities: N86.99 billion, up 35.74%
• Shareholders’ equity: N74.57 billion, up 4.76%
• Earnings per share: 1,451 kobo, up 25.74%

Driving the numbers:

The company’s earnings growth significantly outpaced revenue growth as production costs declined despite higher sales.

• Cost of sales fell 1.03% to N40.35 billion, enabling gross profit to rise 9.15% to N40.81 billion and pushing gross profit margin above the 50% mark from 47.83% a year earlier, reflecting improved operating efficiency.
• Finance income more than doubled to N5.35 billion, benefiting from stronger cash balances and higher investment yields, while finance costs dropped 58.46% to N171.61 million as the company maintained minimal borrowings.
• Operating profit increased 15.01% to N24.53 billion, aided by N387.23 million in other operating gains, compared with a N590.68 million loss in the corresponding period of 2025.

However, administrative expenses grew faster than revenue, rising 21.10% to N5.48 billion, while tax expense increased 31.46% to N10.10 billion, reflecting the company’s stronger earnings performance.

Despite these cost pressures, improved margins, higher finance income and lower financing costs ensured profit before tax expanded much faster than revenue.

Balance sheet performance:

Total assets increased 19.45% to N161.56 billion from N135.27 billion at December 2025, driven mainly by higher trade receivables and cash balances.

• Trade and other receivables surged 62.93% to N65.20 billion, becoming the company’s largest asset category and accounting for approximately 40% of total assets, indicating more working capital tied up in customer balances.
• Cash and cash equivalents rose 10.62% to N46.05 billion, providing strong liquidity support, while inventories declined 6.53% to N14.66 billion, suggesting improved inventory management.
• Total liabilities climbed 35.74% to N86.99 billion, largely driven by a 63.75% increase in trade and other payables to N55.17 billion and a 39.72% rise in current tax liabilities to N21.77 billion.

Borrowings remained negligible at N64.74 million, underscoring the company’s conservative funding structure and limiting exposure to higher interest rates.

Shareholders’ equity increased 4.76% to N74.57 billion, supported by retained earnings of N72.78 billion, although growth was moderated by N16.21 billion paid as dividends during the period.

Market reaction

NASCON’s shares closed unchanged at N200.00 on Wednesday, July 29, indicating investors had yet to fully price in the earnings release.

The stock had previously climbed to about N222 in mid-May before retreating to around N180 during the June market correction.

Despite the pullback, NASCON has gained approximately 86.1% year-to-date, rising from its opening price of N107.50 at the start of 2026, making it one of the Nigerian Exchange’s stronger-performing consumer goods stocks this year.

The company’s H1 performance reflects improving operating efficiency. Despite single-digit revenue growth, NASCON recorded stronger profitability as production costs eased.