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By Chinwendu Obienyi and Chukwuma Umeorah
Despite operational headwinds, three cement companies listed on the Nigerian Exchange Limited (NGX) raked in N362.98 billion in revenue in the full year of 2022, representing a 39.9 percent growth over N259.32 billion they posted in 2021.
This is according to information gleaned from the unaudited full year financial results of the cement companies, namely Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc.
The 39.9 per cent revenue growth was despite the cost pressures faced by the companies due to the depreciation of the Naira and macroeconomic inflationary pressures.
Analysis of the companies’ 2022 financial results showed a combined profit after tax (PAT) for the three cement companies in the period under review grew to N536.97 billion from N505.53 billion recorded in 2021.
The breakdown of revenue of these three cement companies revealed that BUA Cement Plc, maintained a lead in revenue generation, followed by Dangote Cement Plc and Lafarge Africa Plc.
For instance, BUA Cement Plc released its unaudited financial statement for the period ended December 31, 2022, declaring 16.79 per cent growth in Profit Before Tax (PBT) to N120.15 billion in full year 2022 from N101.01 billion achieved in the corresponding period.
The growth in PBT was driven by significant improvement in the sale of bagged cement products. From the Profit and Loss figures, the group revenue increased to a remarkable 40.13 per cent to N360.99 billion in twelve months of 2022 from N257.33 accounted for in 12 months of 2021.
The revenue generated from bagged cement products accounted for 99.46 per cent of the total revenue, achieved by the company during the period under review. From the profit and loss figures, the group declared N101.01 gain in PAT in 2022 from N90.086 billion gain in 2021, attributed to increase in finance cost, Cost of Sales.
Specifically, the gross profit declared for the period jumped by 34.82 per cent to N163.04 billion in 2022 from N120.94 billion in 2021, as operating profit amounted to N129.72 billion in full year 2022 from N104.22 billion in prior-year, representing an increase of 24.46 per cent. Finance cost increased significantly by 518 per cent to 518 per cent from N1.71 billion in the full year 2021 to N10.55 billion in the full year of 2022. The group also recommended an approval from its shareholders for a payment of N2.80 dividend per 1 ordinary share of 50 kobo each, out of the profits declared in the financial year ended 31 December 2022 (2021: N2.60).
Dangote Cement on the other hand, grew its revenue by 17 per cent y/y to N1.62 trillion in 2022, inspired by broad-based expansion across its Nigerian (+21.3 per cent y/y) and Pan African (+4.4 per cent y/y) operations.
Further down, net finance cost increased by 103.9 per cent y/y to N91.66 billion in 2022, following the surge in finance cost (+98.4 per cent y/y to N130.37 billion) which outweighed the increase in finance income (+86.4 per cent y/y to N38.72 billion). The finance cost growth mirrors the impact of higher FX losses (+515.2 per cent y/y to N53.93 billion in 2022) and gross debt (+25.1 per cent y/y to N706.73 billion).
The board proposed a final dividend per share of N20 (same as the corresponding period last year), implying a dividend yield of 7.5 per cent based on the last closing price of N272.00 (February 27, 2023).
For their part, Lafarge Africa Plc reported a 27.3 per cent y/y in its 2022 revenue from N293.09 billion recorded in 2021 to N373.25 billion. This was buoyed by improvements across WAPCO’s cement (+27.0 per cent y/y | 97.0 per cent share of revenue) and aggregate & concrete (+43.4 per cent y/y | 2.9 per cent share of revenue) sales.
The company reported an EPS of N3.33 (2021 FY: N3.17). The increase in the company’s EPS was supported by the stellar growth in revenue during the period. WAPCO’s board has proposed a final dividend of N2.00/s, translating to a dividend yield of 7.3 per cent based on the closing price of N27.40 as at February 28, 2023.
Further out, the company’s PBT grew by 12 per cent y/y to N69.75 billion in 2022 FY. Given the increase in tax expense (+43.1 per cent y/y to N16.10 billion), PAT grew by 5.2 per cent y/y to N53.65 billion.
Commenting on the BUA Cement results, analysts at Coronation Research, said, “BUA Cement’s revenue performance in FY 22 was in line with their expectations (+0.75 per cent variance).
Amongst its peers in the industry, we are pleased with its improved capacity utilisation (57.3 per cent) reflecting in decent volume growth while also taking advantage of the elevated pricing environment. On the flip side, the elevated operating expense profile is worrisome.
Like its peers, in the medium term, given the disruptions in LNG supply, we expect the company to continue to rely on diesel and coal for its production and distribution activities and this is likely to further pressure its cost of sales and operating expenses. Recall in Q3 2022, we anticipated rising net finance costs as the company continued to unwind earlier capitalised borrowing costs as plants become operational. We expect this going forward until the capitalised borrowing costs for operational plants are exhausted”.
With respect to Lafarge Africa’s results, analysts at Cordros Research said the company’s 2022 financials were impressive and in line with its expectations. “We like that the company has consistently reported profitability growth for the fourth consecutive financial year, after the losses recorded between 2016-2018. However, we are concerned about the rising finance cost during the period.
Going forward, we believe WAPCO has the capacity to ramp up its output levels given the group’s intent on driving capacity utilization through debottlenecking exercises across its Ashaka and Ewekoro plants. Hence, we see WAPCO maintaining its earnings growth in 2023 FY.”
