Last Update15 Aug 25
WaneInvestmentHouse made no meaningful changes to valuation assumptions.
Nascon delivered a 35.4% YoY surge in Q2 2025 revenue to ₦36.3bn, with H1 revenue jumping 55% YoY to ₦78.16bn. This growth reflects strong demand recovery, potential price adjustments, and improved market penetration. The significant expansion in gross profit — up 79% YoY in Q2 — underscores operational leverage as higher sales volumes absorbed fixed costs more efficiently.
Margin Expansion Driving Record Operating Profit
Operating profit rose 101% YoY in Q2 to ₦10.9bn, and 196% YoY in H1 to ₦21.3bn. This was aided by:
- A reduction in administrative expense ratio (from ~6.2% of revenue in H1 2024 to ~5.8% in H1 2025).
- Strong gross margin uplift (Q2 gross margin rose to ~53.7% from ~40.5%). The improvement more than offset a loss in “Other operating gains” compared to last year.
Robust Bottom-Line Growth with Elevated EPS
Net profit in Q2 2025 climbed 122% YoY to ₦8.02bn, while H1 2025 profit surged 222% YoY to ₦15.6bn. Earnings per share rose sharply to ₦11.54 in H1 (₦1,154 Kobo), up from ₦3.59 in the prior-year period, reflecting both earnings growth and stable share count. This profitability trajectory positions Nascon for potentially higher dividend payouts if momentum is sustained.
Strengthened Balance Sheet and Liquidity
Total assets grew to ₦111.6bn as of June 2025, from ₦78.5bn at FY 2024. Key balance sheet highlights:
- Cash and cash equivalents rose to ₦36.57bn (up ~48% from FY 2024), providing significant financial flexibility.
- Trade receivables jumped to ₦38.8bn from ₦17.2bn at FY 2024 — likely tied to higher sales volumes, though it raises working capital intensity.
- Low leverage: Borrowings total just ₦1.14bn short term and ₦38.6m long term, limiting interest burden.
Operational Risks to Monitor
- Working capital strain: High receivables and inventory could pressure cash flow if collections slow.
- Volatility in “Other operating gains”: This swung from a ₦1.09bn gain in Q2 2024 to a ₦272m loss in Q2 2025.
- Distribution cost growth: Up 22% YoY in Q2, potentially reflecting higher fuel or logistics expenses.
- Tax expense increase: More than doubled YoY in H1 due to higher pre-tax income and possibly higher effective tax rates.
Strategic Positioning
As a key player in Nigeria’s salt, seasoning, and related products market, Nascon’s ability to sustain volume growth and protect margins despite cost pressures demonstrates strong competitive positioning. The surge in profitability alongside a strong liquidity position supports reinvestment capacity for production expansion, distribution enhancements, and shareholder returns.
Conclusion
Nascon’s H1 2025 performance signals a fundamentally stronger earnings base, supported by margin expansion, disciplined cost control, and robust liquidity. The company’s low debt levels and substantial cash reserves provide resilience in Nigeria’s inflationary environment. If management maintains collection discipline and operational efficiency, Nascon is well placed to sustain its growth trajectory.
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Disclaimer
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