July 29, 2026/Cordros Report
NASCON Allied Industries Plc (NASCON) released its Q2-26 unaudited financial results yesterday (28 July), reporting earnings per share (EPS) of NGN14.51, up 21.1% y/y. Consequently, H1-26 EPS rose 25.7% y/y to NGN14.38. Earnings growth during the quarter was underpinned by a 308bps y/y reduction in the OPEX margin and a 156.6% y/y increase in net finance income, more than offsetting the impact of a 500bps y/y expansion in the cost of sales margin, which weighed on gross profitability.
NASCON grew revenue by 15.2% y/y in Q2-26 (H1-26: +3.8% y/y), reflecting the residual impact of prior price increases alongside modest volume growth. Regionally, the Northern market remained the largest revenue contributor, although its share declined to 75.1% (Q2-25: 78.3%) as revenue growth moderated to 10.4% y/y (H1-26: +1.2% y/y). By contrast, the Western region gained further traction, with its contribution to group revenue rising to 19.0% from 15.8% in Q2-25, underpinned by robust revenue growth of 38.7% y/y (H1-26: +8.5% y/y). Meanwhile, the Eastern region continued to deliver strong momentum, posting revenue growth of 16.3% y/y (H1-26: +28.9% y/y) while maintaining a stable 5.9% share of group revenue.
Sequentially, group revenue increased by 6.3% q/q, driven by robust sales growth in the Western region (+19.7% q/q) and moderate expansion in the North (+4.5% q/q), while the Eastern region underperformed, with revenue declining by 7.5% q/q.
Gross margin contracted by 500bps y/y to 48.7% in Q2-26 (H1-26: +245bps y/y to 50.3%), as cost of sales grew 27.6% y/y (H1-26: -1.0% y/y), outpacing revenue growth of 15.8% y/y. The increase in cost of sales was primarily driven by a 32.0% y/y rise in raw materials consumed during the quarter. Consequently, EBIT margin declined by 137bps y/y (H1-26: +293bps y/y), despite a 308bps y/y reduction in the OPEX margin. Nevertheless, EBITDA margin expanded by 162bps y/y to 33.3%, reflecting a sharp 202.9% y/y increase in depreciation expense, which lifted EBITDA through the add-back of non-cash charges.
Further down, net finance income surged 156.6% y/y to NGN2.74 billion (H1-26: +165.0% y/y to NGN5.28 billion), driven primarily by a 122.7% y/y increase in interest income on short-term fixed deposits to NGN2.82 billion (H1-26: +126.0% y/y to NGN5.35 billion).
Overall, PBT rose 23.0% y/y to NGN14.72 billion (H1-26: +27.6% y/y). Consequently, net profit increased 21.2% y/y to NGN9.72 billion despite an effective tax rate of 34.0%, bringing H1-26 net profit to NGN19.60 billion, compared with NGN15.60 billion in H1-25.
Comment: NASCON delivered a resilient H1-26 performance, combining modest revenue growth with improved operating efficiency and stronger treasury income. Although Q2-26 reflected renewed cost pressures as raw material costs increased in support of volume recovery, the group maintained a stronger margin profile than the prior year, reinforcing the benefits of disciplined cost management. Looking ahead, we expect the pace of volume recovery, energy cost dynamics and continued discipline in direct cost management to remain the key drivers of operating leverage and earnings growth through the remainder of the year. Our estimates are under review.
