Lafarge Africa Rises by 29% as Investors Bet on Cement Stock
Lafarge Africa Plc’s market value increased by about 29% as investors circled around the cement company’s stock on the Nigerian Exchange trading platform.
Strong earnings performance increased morale to buy Lafarge Africa shares in the equities market. Its market price has been less volatile; the stock is trading at less than a 12% discount to its 52-week high.
The unusual volume transacted in the market suggests investors are moving into the cycle ahead of the fourth quarter earnings release – which is full of optimism that the cement company will keep its earnings growth momentum.
In its 9-month earnings release, the cement company revealed that earnings per share grew by 52.8% year on year to N3.73 from N2.44. In the equities market, investors increased bets on Lafarge Africa on expectation that the company’s earnings would continue to uptrend.
Stock market analysts noted unusually high volume, which influenced Lafarge Africa WAPCO market price uptrend reversed last minute on Friday on the local bourse.
WAPCO closed the week at N54 after opening the week at N42 per share, with N57 being the best price reached in the last 12 months. Lafarge Africa’s 16.107 billion shares outstanding on the Nigerian Exchange were valued higher by 29% to about N870 billion on Friday.
Earnings Scorecard
Profit after tax grew by 52.8% year on year to N60.076 billion from N39.305 billion in the comparable period in 2023. The cement company’s revenue increased by 65.9% year on year to N479.50 billion, driven by increases in volumes and price adjustments from N289.081 billion 12 months ago.
At N241.730 billion, the cement company’s cost of goods sold was 71.4% higher than the previous year, when it was N141.019 billion. Gross profit margin dipped by 1.6% to 49.6% due to cost pressures that built up from weak macroeconomic indices.
Furthermore, its operating expenses grew by about 39% year on year to N109.736 billion from N79.245 billion in the comparable period. This thinned out the bottom line in addition to pressure from finance costs.
At N35.751 billion, net interest paid was 336% above N8.193 billion used to service borrowings in the equivalent period in 2023 due to Nigeria’s high interest rate environment, which pushed the benchmark interest rate to 27.25%.
Still, pretax profit came stronger year on year, settling at N94.326 billion from N61.156 billion in the comparable period.
Overall, net profit grew by 52.8% year on year to N60.07 billion, indicating a strong rebound after a 17.3% year on year decline in the first half of the year. Naira Plunges on Suboptimal FX Intervention
