9M:Lafarge Africa Posts N180bn Revenue, N28.2bn Profit

Goddy Egene

Lafarge Africa Plc has recorded improved top and bottom-lines for the nine months (9M) ended September 30, 2020 as deleveraging and cost efficiency efforts continue to pay off.

The cement firm reported a revenue of N179.877 billion in 2020, up 10.3per cent from N163.1 billion. Selling and marketing expenses were reduced by11.9 percent to N2.811 billion, from N3.189 billion. Also, financing cost declined by 54.5 per cent from N16.578 billion to N7.541 billion in 2020.

As a result, profit before tax (PBT) rose by70.3 per cent from N20.139 billion to N34.291 billion, while profit after tax(PAT) increased by 37.5 per cent from N20.5 billion to N28.2 billion.

Looking at the results, analysts at FSDH Research said the growth in revenue was driven by uptick in sales, which offset the weakness in aggregate and concrete.

According to the analysts, the recovery in revenue reflects improvement in private sector cement demand and absence of covid-19induced pressures on construction activities.

They added that deleveraging efforts yielded decent results as net finance cost dipped 55.7 per cent to settle at N6.8billion in 2020.

“While finance income dipped lower by 38.8 per cent due to the low yield environment, finance cost dropped 54.5 per cent. This fed into strong growth in pre-tax profits which grew 70.3 per cent to N34.2 billion in9M 2020 from N20.1 billion in 9M 2019. Lastly, we were impressed by the 37.1 per cent y/y increase in Net income to N28.2bn in 9M 2020which reflects the largely impressive performance “The company 9M 2020performance was overall positive. However, we are concerned with the 39.0 percent quarter/quarter (q/q) spike in cost of Sales to N45.5bn in Q3 2020 despite a modest 4.4 per cent increase in
revenue. Thus, we think the company is beginning to be affected by the impact of the naira devaluation which affects the naira cost of imported raw materials and United States dollars (USD) priced energy
sources.

The Chief Executive Officer of Lafarge Africa Plc, Mr. Khaled El Dokani, had in September said that the proactive measures put in place have been instrumental to the positive results the company had recorded in recent times.

“Our route-to-market strategy has proven to be effective, particularly, our expanded distribution network which proved very valuable during the peak of the COVID-19pandemic lockdown. We have steadily expanded our retail footprint in our core markets. The recent re-launch of our Supaset brand has continued to gain traction with our customers, especially with the block makers,” El Dokani, had explained.