Lafarge Africa grows profit by 22%

Lafarge Africa Plc achieved a 22 per cent year-on-year profit after tax growth in the first half of 2015, the company’s results for the period showed.

The results, filed with the Nigerian Stock Exchange on Wednesday, showed that the cement manufacturer’s PAT rose from N21.507bn to N26.209bn.

The company’s pre-tax profit edged up by 15 per cent to N29.722bn in the six-month period to June 30, 2015 from N25.845bn in the corresponding period of 2014.

The results also showed growth in revenue and assets with the revenue rising by 12 per cent to N116.709bn in the review period from N104.157bn in the same period of last year.

Analysts at FBN Capital Research said the results, particularly the second quarter results, was strong across all key headline items.

They said, “The key drivers of the remarkable earnings growth include a 200 basis points expansion in gross margin to 36.6 per cent, a N2.5bn share of profit from associates – essentially UNICEM – (vs nil income in Q2 2014) and a net interest income of N2.2bn (vs. -N315 Q2 2014).”

In terms of contribution to sales, the analysts said, WAPCO which grew its sales by 14 per cent year-on-year to N31.9bn (53 per cent of group sales) was the biggest contributor to the group’s revenue, adding that Ashaka’s revenue grew six per cent year-on-year to N6.2bn.

They said, “Overall, the completion of repair works at Ashaka and South Africa following insurgent attacks on the former and damage to the kilns by the latter were the major factors behind the strong expansion in gross margin.

“This is in addition to Ashaka’s higher utilisation of cheap coal fuel relative to low-pour-fuel-oil. We understand that Ashaka has now attained a coal-to-total fuel mix ratio of over 80 per cent.”

Based on the positive performance, the analysts hinted that Lafarge Africa was expected to exceed their 2015 pre-tax profit consensus (N47bn) for the company.

They also noted that Lafarge shares had outperformed the sector and the NSE All-Share Index this year.

“Year-to-date, the shares have gained 23 per cent compared with the -5.3 per cent and -12.0 per cent return delivered by the sector and the ASI, respectively,” they said.

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