NASCON profit surges 28% on cost cuts; receivables pose risk
Nigerian salt producer NASCON posted a 28% jump in first-half profit as falling production costs and near-zero debt offset sluggish revenue growth, though surging receivables warrant investor caution.
Nigeria’s NASCON Allied Industries generated a profit before tax of N29.70 billion in the first half of 2026. This represents a 27.6% year-on-year increase, even as top-line growth remained constrained. Revenue edged up just 3.8% to N81.16 billion, according to unaudited filings submitted to the Nigerian Exchange on Wednesday.
Basic earnings per share climbed 25.7% to 1,451 kobo, driven primarily by strict cost control and a highly conservative capital structure. Cost of sales fell 1.03% year-on-year to N40.35 billion, pushing gross margins above the 50% mark for the first time, up from 47.8% a year earlier. Operating profit grew 15% to N24.53 billion, aided by N387.23 million in other operating gains that reversed a prior-year loss.
Yields on large cash reserves pushed finance income up 125.8% to N5.35 billion. Simultaneously, finance costs plummeted 58.5% to N171.61 million because the company maintained negligible borrowings of just N64.74 million. This near-absence of debt effectively insulated the balance sheet from Nigeria's elevated interest rates.
Working capital risks emerge
Despite these operational wins, the financial statements reveal emerging strain in working capital management. Outstanding customer balances surged 62.9% to N65.20 billion. This line item is now the company’s largest asset, comprising roughly 40% of total assets and signaling potential bottlenecks in cash collection.
Liabilities expanded rapidly, climbing 35.7% to N86.99 billion. Trade payables jumped 63.8% to N55.17 billion, and current tax liabilities rose 39.7% to N21.77 billion. While total assets grew 19.5% to N161.56 billion and cash increased 10.6% to N46.05 billion, the soaring payables suggest the firm is heavily leaning on supplier credit to fund its operations.
Shares closed unchanged at N200.00 on Wednesday, indicating the market had not yet fully digested the mixed results. The stock has already rallied 86.1% year-to-date from its opening price of N107.50, hitting a mid-May peak of N222 before a broader June correction pulled it back to N180. For market participants, the central challenge is determining whether this margin-driven profit growth justifies the year's massive rally, particularly as working capital risks expand on the balance sheet.
