October 30, 2026/Cordros Report
NASCON Allied Industries Plc (NASCON) released its Q3-26 unaudited financial results yesterday (29 October), reporting standalone EPS of NGN13.46 (+4.2% y/y), bringing 9M-26 EPS to NGN14.16 (+18.0% y/y). Gross margin expanded by 151bps y/y as cost of sales (-11.5% y/y) declined faster than revenue (-8.7% y/y). However, higher operating expenses (+13.2% y/y) constrained earnings growth by weighing on operating profitability, while an 84.3% y/y increase in interest income provided an additional boost to earnings below the operating line.
NASCON’s revenue declined by 8.7% y/y in Q3-26 (9M-26: -0.3% y/y), primarily reflecting weaker sales in the Northern region, which accounted for 74.0% of group revenue, down 1.70ppts y/y (9M-26: -1.85ppts to 75.2%). Northern region sales declined by 10.7% y/y in Q3-26 (9M-26: -2.7% y/y). Similarly, Western region sales fell by 4.3% y/y in Q3-26, although the region’s contribution to group revenue increased by 89bps y/y to 19.4% (9M-26: +77bps to 18.4%), reflecting its relative resilience. In contrast, Eastern region sales grew by 4.0% y/y in Q3-26 (9M-26: +19.9% y/y), supported by deeper market penetration, with contribution to group revenue increasing by 81bps y/y to 6.6% (9M-26: +1.08ppts to 6.4%).
Gross margin expanded by 151bps y/y to 52.0% in Q3-26 (9M-26: +209bps y/y to 50.8%), as cost of sales (-11.5% y/y) declined faster than revenue (-8.7% y/y). The decline in cost of sales was partly driven by a 5.9% y/y reduction in raw materials consumed, with the 3.7% appreciation of the naira during the quarter potentially providing some relief on imported inputs.
However, higher operating expenses (+13.2% y/y; 9M-26: +8.8% y/y) absorbed much of the gross profit gains, limiting the improvement in operating profitability. Consequently, EBIT margin expanded marginally by 2bps y/y to 30.4% in Q3-26 (9M-26: +196bps y/y to 30.3%). Meanwhile, EBITDA margin expanded by 395bps y/y to 35.9% (9M-26: +523bps y/y to 35.1%), largely reflecting a 218.5% y/y (9M-26: +208.1% y/y) increase in depreciation charges on property, plant and equipment.
Below the operating line, net finance income increased by 94.6% y/y to NGN2.89 billion in Q3-26 (9M-26: +134.6% y/y to NGN8.07 billion), driven primarily by higher interest income on short-term fixed deposits, which rose by 84.3% y/y to NGN2.97 billion (9M-26: +109.2% y/y to NGN8.32 billion). Meanwhile, finance costs declined by 34.1% y/y to NGN84.82 million (9M-26: -52.7% y/y to NGN256.42 million), driven by a 99.9% y/y decline in interest expense on borrowings.
Overall, PBT grew by 2.8% y/y to NGN13.78 billion in Q3-26 (9M-26: +18.5% y/y). Net profit rose by a faster 4.2% y/y to NGN9.10 billion (9M-26: +18.0% y/y to NGN28.70 billion), supported by a lower effective tax burden relative to PBT growth, with the effective tax rate at 34.0% (Q3-25: 34.9%).
Comment: In our view, NASCON’s efficiency gains were offset by higher operating expenses, constraining operating profitability. However, stronger treasury income supported modest earnings growth. Looking ahead, a recovery in volumes across the Northern and Western regions will be critical to restoring organic sales growth, while energy costs and continued discipline in direct cost management will remain key determinants of earnings momentum. Our estimates are under review.
