Skyway Aviation Handling Company Plc reported its unaudited financial results for the first half of the year ended June 30, 2026. The company recorded a pre-tax profit of N5.827 billion, representing a 41.49% decline from the N9.958 billion recorded in the corresponding period of 2025.

For the second quarter of 2026, pre-tax profit fell to N1.928 billion. This represents a 50.54% drop from N3.899 billion in the first quarter of 2026 and a 57.98% decline from the N4.589 billion recorded in the second quarter of 2025.

Although H1 revenue reached 51.76% of the full-year 2025 revenue, pre-tax profit represented only 48.53% of the previous full-year result. Profit after tax represented just 39.48% of the 2025 full-year figure, indicating weaker earnings conversion.

Rising Direct Costs Squeeze Margins

Revenue increased by 9.25% to N23.013 billion, driven primarily by import cargo handling. Revenue from import cargo handling rose by 44.19% to N5.538 billion, contributing 24.07% of total revenue.

Passenger handling and related services remained the largest business line, contributing 71.50% of revenue, though it grew by only 2.38% to N16.454 billion. Export cargo handling revenue declined by 11.37% to N1.020 billion, accounting for 4.43% of total revenue.

The revenue growth did not translate into higher gross profit because direct costs rose by 63.07% to N10.754 billion. Consequently, the direct cost-to-revenue ratio increased to 46.73% from 31.31%, reducing the gross profit margin to 53.27% from 68.69%.

The largest direct-cost pressures came from equipment repairs, which increased by 117.81% to N2.374 billion, and direct labour, which rose by 53.90% to N2.584 billion. Equipment running costs also surged by 202.94% to N1.104 billion.

Together, equipment repairs, equipment running, and depreciation amounted to N4.717 billion, representing 43.86% of total direct costs. When direct labour is included, labour and equipment-related costs accounted for 67.89% of total direct costs.

Administrative expenses rose by 41.25% to N6.584 billion, causing the operating profit margin to decline to 26.18% from 47.60% in H1 2025. Operating profit for the period stood at N6.024 billion, down 39.91% from N10.025 billion.

In the second quarter of 2026, revenue increased by 6.08%, but direct costs rose by 65.57%. This caused the quarterly gross margin to fall to 48.33% from 66.90%, while the operating margin declined to 17.37% from 43.58%.

Net finance expenses increased by 194.62% to N197.205 million, as finance income rose to N133.905 million from N65.940 million, while finance expenses rose to N331.110 million from N132.876 million. The effective tax rate increased to 34.01% from 18.30% in H1 2025.

Liquidity Pressures and Balance Sheet Expansion

SAHCO's balance sheet expanded with total assets increasing by 63.40% to N86.548 billion from N52.966 billion. Property, plant, and equipment rose to N53.776 billion, accounting for 62.13% of total assets.

However, liquidity weakened as current assets declined by 9.77% to N26.020 billion, while current liabilities increased by 64.14% to N14.809 billion. This reduced the current ratio to 1.76 times from 3.20 times, and working capital declined to N11.212 billion from N19.815 billion.

Cash and cash equivalents fell by 16.17% year-on-year to N3.859 billion from N4.603 billion, representing a 21.01% decline from December 2025. Trade and other receivables remained elevated at N20.105 billion, representing 77.27% of current assets.

Total external debt declined by 26.01% to N3.250 billion from N4.392 billion, leaving the company in a net-cash position of N608.855 million. However, short-term borrowings doubled year-on-year to N1.404 billion.

H1 2026 return on average assets stood at 4.54%, while return on equity was 6.07%. Asset turnover was modest at 0.27 times, indicating that the company generated 0.27 in half-year revenue for every 1.00 invested in assets.

Stock Performance and Market Reaction

Skyway Aviation’s share price closed May 2026 at 156.95, representing a month-to-date gain of 9.68% and a year-to-date return of 77.44%.

The share price increased further to 171.20 at the end of June, delivering a month-to-date gain of 9.08% and lifting the year-to-date return to 93.56%.

The stock closed July unchanged at 171.20, leaving the month-to-date return at 0.00% and the year-to-date return at 93.56%.