Lafarge Africa Plc is a member of the LafargeHolcim Group, the biggest building and concrete solutions company in the world is not find ease in Nigeria. Though Lafarge Africa Plc is A Leader in Sub-Saharan Africa and second cement industry that has migrated to the NSE Premium Board last week
The company first quarter in 2018 results released through the Nigerian Stock Exchange (The NSE) has different hard words for a newly migrated Lafarge to Premium Board. Though the results shown negative performance, the overall view disclosed that the results of revenue and net loss released shown an improvements over Q4, 2017.
It is also view that the slight decline in revenue year in year out (y/y) was due to lower sales volume, given that average cement prices are currently higher by about 9% compared to Q1-17, on estimate. Analyst estimated about 7-8% growth in volume compare with Q4-17, consistent with the guidance provided by most producers during the 2017FY.
Revenue break-down shows “cement” and “other” revenues declined by 2% y/y and 26% y/y respectively while “aggregate and concrete” revenue grew by 8% y/y.
From a negative in Q4-17, gross and EBIT margins of 22.3% and 7.8% were reported in Q1-18. The margins are lower than the 25.7% and 16.5% respectively reported in Q1-17. Compared to Q4-17, CoGS was lower by 24%, owing to the non-occurrence of the significant one-off charges that were recognized in the final quarter of 2017 and impacted adversely on earnings. Gross profit was lower y/y by 14%, reflecting both lower margin and volume.
EBIT and the margin were lower by 53% y/y and 872 bps y/y respectively, owing to (1) lower volume and gross margin and (2) and higher opex and the margin (41% y/y and 432 bps y/y). On opex, administrative spend increased by 36% y/y while campaign and innovation spend was more than 6x higher compared to Q1-17.
Though the net finance charge of N9.2 billion reported was much lower than the N24.5 billion reported in Q4-17, the amount is higher by 133% vs. Q1-17.
Asides from the bump in Q4-17, the reported net finance charge is also high, in historical context.
Interest on borrowings alone was higher by 78%, reflecting the relatively higher borrowings of N269 billion compare with N142 billion in Q1-17 in the balance sheet, following the reclassification of related party loans from quasi-equity, in H2-17.
Net FX loss of N640 million was also reported during the quarter.
Loss before and after tax of N2.95 billion and N2 billion were reported respectively. A deferred tax credit of N1.86 billion was recognized, resulting on net, to a tax credit of N944 million during the quarter.
Comment: analyst expect reaction to the result would be negative, given the lingering loss after tax consistent in the last three quarters.
