Cargo handlers record higher revenues despite airline crunch

The year 2020 was one which different sectors of the Nigerian economy will not forget in a hurry. While some believe it was filled with losses due to the COVID-19 pandemic, others witnessed a boom in certain segments of their operations, especially the aviation handling companies.

Nigerian Aviation Handling Company Plc (NAHCO) and Skyway Aviation Handling Company Plc (SAHCO) are the only aviation handling firms listed on the Nigerian Stock Exchange (NSE) and a look into their books revealed that the year was not as bad as was initially projected. Though, the revenue they made from flight passengers related services dropped due to the lockdown, revenue made from cargo handling rose significantly.

READ: NAHCO reacts to $8.06 million intercepted by Customs at Lagos Airport 

NAHCO, Nigeria’s oldest handling company recorded revenue growth in import cargo handling from N3.60 billion in 2019 to N3.65 billion at the end of 2020. Revenue from its export cargo business rose from N348.6 million to N397.4 million in 2020.

Cargo Handling includes invoices raised for; cargo documentation services for airlines, import, and export.

SAHCO on the other hand reported its import revenue rose from N4.436 billion in 2019 to N4.865 billion, it also grew its cargo handling export revenue from N318.38 million recorded in 2019 to N447.90 million in 2020.

Cargo handling in SAHCO Plc also includes income from Cargo documentation services rendered to airlines, which include import and export cargo facilitation through Nigeria’s biggest network of customers, bonded warehouses in Lagos, Kano, Abuja, and Port-Harcourt. SAHCO’s profit grew from N446.53 billion to N639.10 billion in 2020.

READ: Aviation contribution to GDP drops by 38.86% in Q3 2020 – NBS

What led to the growth?

While commercial airlines recorded losses from their passenger businesses, Cargo Handling companies were able to avoid a similar fate. That aspect of their revenues remained intact as airlines continued lifting goods, especially essential items such as medical supplies, and personal protective equipment (PPE).

According to IATA, “Airlines transport over 52 million metric tons of goods a year, representing more than 35% of global trade by value but less than 1% of world trade by volume. That is equivalent to $6.8 trillion worth of goods annually, or $18.6 billion worth of goods every day.”

For companies like NAHCO and SAHCO, the economic lockdown may have impacted negatively on their revenues from passenger handling business but their cargo business got a major boost from higher importation of goods.

READ: Aviation: Nigerian ground handling firms count revenue losses due to pandemic-induced plunge

Data from the National Bureau of Statistics also reveal Nigeria imported items worth N627 billion through the MMA Cargo alone in the first three quarters of 2020. Total exports from the MMA cargo terminal was

This contributed significantly to the increase in revenue recorded by the cargo handling companies during the year.

On the stock market

NAHCO has a market capitalization of N3.5 billion and is trading at just 51.6% of its book value. However, its price-earnings multiple of 21x suggests it is not making enough profit relative to its balance sheet. NAHCO for example has a net asset of N6.8 billion and carries no external debt.

SAHCO on the other hand has a market capitalization of N4.1 billion and trading at a price to book ratio of just 21%. It also has a price to earnings ratio of 6.47x. SAHCO has a total shareholders fund of N19.6 billion mostly made up of property plant and equipment. However, it has a net cash balance (after debt) of N1.8 billion.