After recording pre tax losses in the 2016 to 2018 financial years, Lafarge Africa Plc has been able to sustain profitability for the third consecutive year as shown in its 2021 full year financial result for the period ended December 31, 2021.
Just as the board of directors has proposed N1,00 dividend, same as in 2020 full year, the company share price closed at N24 at close of business transaction on Friday March 4, 2022., on the trading floor of Nigerian Exchange Limited (NGX). Closure date for the dividend is April 7, while payment date is April 21, 2022.
The post tax profit of N51 billion is also the highest since 2014, N33.82 billion, which market watchers believed that the divestment from its loss making South Africa subsidiary in 2019 and the execution of its debt restructuring programme have continued to yield positive results.
However, there are concerns among some securities dealers in the capital market, about the sustainability of the current pricing environment, given that cement producers have raised prices significantly over the past two years.
Further review of the financial statement shows that revenue grew by 27.1%, on the back of improvements in cement sales and aggregate and concrete sales. Gross margin declined marginally by 15bps to 58.9%, due to the slightly higher increase in the cost of sales ex-depreciation.
The rise in the cost of sales was driven mainly by the variable cost and maintenance cost components, analyst believe the increase in these cost lines was due to the pass-through impact of the local currency’s devaluation on energy cost, essential materials such as gypsum, and spare parts associated with maintaining plants.
Despite the increase in the cost of sales, EBITDA rose by29.6% on the back of favourable price/volume mix and gains from its operational efficiencies evidenced by the moderation in OPEX/sales ratio by 25.8% in 2021 as against 26.8% in 2020. Sequentially, EBITDA margin strengthened to 33.4% when compared to 32.7% in 2020.
Earnings were also lifted by the moderation in finance cost, reflecting gains from the reduction in gross debt by 53.2% to N23.28 billion in 2021 as against N49.73 billion in 2020. Meanwhile the growth in finance income was supported by foreign exchange gains of N1.18 billion, which was absent in 2020 financial year.
Lafarge Africa Plc is a member of the Holcim Group, the world’s leading in innovative and sustainable building solutions. Its was incorporated on 24th February 1959 and listed as a publicly quoted company on the Nigerian Exchange Group (NGX) on 17th February, 1979.
The company serves Nigeria with a wide range of building and construction solutions designed to meet housing and construction needs from small projects like individual home building to major construction and infrastructure projects.
With plants in Ewekoro and Sagamu in the South West, Mfamosing in the South and Ashaka in the North-East of Nigeria, Lafarge Africa Plc, currently has an installed cement production capacity of 10.5MTPA and has plan to grow in the near term.
