Lafarge Africa has released first quarter (Q1) 2017 results showing an increase in turnover by 55 percent to N81.3 billion for the period.
The company reported profit after tax earnings of N5.2 billion from a loss after tax of N1.9 billion in the prior period.
According to management, domestic cement volumes rose by 6 percent from Q4’16, thanks to seasonality effect. Following earlier price hikes recorded in 2016, the Group raised prices in Q1’17 as the cement manufacturer continues to protect margins.
Gross margin for the period (25.7%) was ahead of the 14.8 percent reported in Q1’16. Meanwhile the firm’s energy optimisation projects are starting to yield dividend.
The Group achieved record performance in Alternative Fuel at the Ewekoro plant, up to 46 percent.
Michel Puchercos, CEO of Lafarge Africa, said: “Our turnaround plan continued to deliver strong results in Q1 2017, in spite of the challenging environment in Nigeria and South Africa. In Nigeria, domestic cement volume improved by +6% compared to last quarter, thanks to seasonality, however the market declined compared to last year due to the recession that started in Q2 2016.
“Our commercial transformation contributed to improved performance and sustained market share, the logistics & industrial improvement plan delivered the expected benefits and our energy optimisation strategy (AF & coal substitution) achieved record performance, mitigating gas shortages at low cost. EBITDA margin reached 30 percent during the quarter in Nigeria.
“In South Africa, the activities were affected by lower volumes in the cement division, despite the price increase from last year. The company continues to focus on cost optimisation, to restore profitability.
‘Overall, we are on track to deliver our ambition for 2017 and maintain our outlook for the cement demand growth of 0% to 2% for Nigeria.”
During the quarter, Lafarge made progress with its investment for the Ashaka CPP, initial work for the AF and coal development and completion of the Mfamosing line II. In total capital expenditure in the quarter reached N9.1 Billion.
The main divestment relates to the disposal of the Elephant Cement House to the Lagos State Government for N3.1 billion, which generated a capital gain of N1.2 Billion. Lafarge’s net debt remained stable at N107 billion, for the period.
In spite of the overall decline in the cement market in the quarter, the firm expects a gradual recovery of the economy, during the second half of the year.
“We maintain our outlook on the cement market in Nigeria to grow between 0 percent to 2 percent,” Lafarge Africa said.
Lafarge Africa said it is well positioned to benefit from expected upturn in the market. The business turnaround plan is expected to be further consolidated, through local sourcing, fuel flexibility, stable industrial operations, logistics and commercial optimisation initiatives.
On the other hand, the South African environment is expected to remain challenging and Lafarge Africa retains its expectation of a flat to declining market. However, the commissioning of the new grinding line at the plant, our cost containment and commercial excellence programs should cushion the impact of the declining economic environment on our performance, it said.
Lafarge Africa plc, a leading sub-Saharan Africa building materials company is a subsidiary of LafargeHolcim, a world leader in building materials. Listed on the Nigerian Stock Exchange with a presence in Africa’s two largest economies, Nigeria and South Africa, Lafarge Africa is actively participating in the urbanisation and economic growth of Africa.
Combining its operations in Nigeria – Ewekoro and Sagamu plants in Ogun State, Ashakacem in Gombe State, Mfamosing in Cross Rivers State, Atlas cement in Rivers State and Ready-Mix Nigeria with its varied operations in South Africa, Lafarge Africa has a current installed cement capacity of 14.1Mtpa. This is in addition to strong market leading positions in Aggregates, Ready mix concrete and Fly Ash.
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