Lafarge Africa Profit Slides by 17% to N29 billion
Lafarge Africa Plc posted more than 17% decline in profit, from N35.479 billion in the first half of 2023 to N29.350 billion in June, 2024, its regulatory filing on the Nigerian Exchange has shown.
In its unaudited financial statement for the first half of the year, the cement company’s revenue rose by 49.5% year on year to N295.58 billion from N197.68 billion in the prior period.
Its cement sales jumped up by 49.6% to N287.01 billion, aggregate and concrete sales, increased by 47.25% to N8.23 billion, while other products line surged by 79.59% to N335 billion. The broad-based increase in revenue items line drove the topline growth in H1 2024, analysts said.
The company’s adjusted cost of sales increased by 66.4% year on year to N134.81 billion in H1 2024 from N81.02 billion in H1 2023, CSL Stockbrokers Limited said in its review note.
“We attribute the rise in cost to the impact of the steep devaluation of the currency, elevated inflationary pressures, and rising energy costs”, the investment firm said.
Despite the increase in cost of sales, Lafarge Africa’s gross profit grew by 37.8% year on year to N160.76 billion in H1 2024. However, the gross margin declined by 4.6 percentage points to 54.39% in H1 2024, down from 59.01% in H1 2023.
Lafarge Africa’s adjusted operating expenses increased by 36.58% year on year to N69.85 billion, up from N51.14 billion in H1 2023.
Analysts explained that the rise in OPEX was driven by a 33.2% increase in selling & distribution expenses adjusted for depreciation, which reached N53.65 billion, and a 49.1% rise in administrative expenses totaling N16.20 billion.
CSL Stockbrokers said despite these cost pressures, earnings before interest tax depreciation and amortisation (EBITDA) grew by 40.4% to N92.59 billion in H1 2024, up from N65.93 billion in H1 2023.
Analysts said the EBITDA margin decreased by 2 percentage points in the period to 31.32% in H1 2024 down from 33.35% in H1 2023. Depreciation and amortisation rose slightly by 0.3% to N13.68 billion, details from the cement company’s unaudited financials show.
Other Income, which includes gains from the disposal of property, plant, and equipment, government grants, sale of scraps, and other miscellaneous sources, surged by 290.0% to N1.66 billion from N425 million in H1 2023.
Operating profit increased by 50.9% year on year to N78.91 billion from N52.29 billion in H1 2023. Lafarge reported a net finance cost of N32.28 billion, a significant shift from the net finance income of N3.03 billion recorded in H1 2023.
This sharp increase in net finance cost was driven by a rise in finance cost to N33.31 billion, up from N1.41 billion in H1 2023, coupled with a decline in finance income to N1.03 billion from N4.44 billion in H1 2023.
The growth in finance cost was due to a substantial increase in net FX losses, CSL Stockbrokers wrote. Analysts noted that in H1 2023, the company reported total FX loss of N19.91 billion.
“We note that in Q2 2024, the company did not incur any FX loss but instead recorded FX gain of N1.89bn. The reported FX loss stems from Q1 2024”.
The results showed that Lafarge Africa pre-tax profit decreased by 15.7% year on year to N46.63 billion in H1 2024, down from N55.32 billion in the comparable period in 2023.
The company’s net income fell by 17.3% year on year to N29.35 billion in H1 2024, compared to N35.48 billion in H1 2023. Earnings per share also declined by 17.3% to N1.82, down from N2.20 in H1 2023. Presco Grows Profit by 158% to N39 Billion
