In a way to show investors’ approval and reaction to the sale of Lafarge South Africa Holdings to LafargeHolcim Group, coupled with the improved financial position of Lafarge Africa Plc, investors on Tuesday rewarded the company’s stock with higher pricing.
As at the end of trading on Tuesday in Lagos, Lafarge stock price rose 9.92 percent to its highest in the last 8 months at N14.40, raising its year-to-date returns to 15.66 percent against 5.22 percent as at the close of trading on Monday.
Lafarge Africa, Nigeria’s second-largest cement maker, returned to profitability in the first half (H1) of 2019, following a 40.7 percent decline in the cost of funds that helped boost the firm’s bottom line despite a decline in revenue.
Lafarge’s net income rose by 246 percent to exit its loss position of N6.34 billion in the corresponding period of 2018 to a profit after tax of N9.27 billion in 2019, according to the company’s report released to the Nigerian Stock exchange (NSE) Monday.
This was on the back of a 41 percent decline in finance cost to N14.05 billion in H1 2019 from N23.71 billion in H1 2018, while the company cut considerably its expenses during the period under review.
Mobolaji Balogun, Chairman, Lafarge Africa said at the company’s Annual General Meeting (AGM) held on Monday, that the company has realized so far a sum of $114 million from its deleverage move on its South African holdings.
This $114 million is said to have been used to finance the company’s debt and boost its operational performance. This was evident in Lafarge’s interest in borrowing falling by 16.25 percent to N13.4 billion in H1 2019 from N16 billion in H1 2018.
Also bank overdraft for the firm dropped to N964.7 million from as much as N1.5 billion the same period last year.
Like every other firm, Lafarge Africa had its own fair share of economic and business headwinds, evident in the last 5 quarters after the second-largest cement maker by market share recorded losses consecutively due to the poor performance of the South African unit.
Its parent company, Switzerland-based LafargeHolcim, agreed to purchase the shares for the consideration being a set-off of all the outstanding amounts due by the company to Caricement under the Inter-Group Loan Agreements at the closing date, which is July 31, 2019.
This is coming after the Securities and Exchange Commission (SEC) approval for the merger between Lafarge Africa Plc and Lafarge Ready Mix Nigeria Limited.
Encouraged by its improved financials, the company is prepared towards having a stable pricing environment, improved cement growth and reduction in cash cost in 2019.
“In building for growth, Nigeria is delivering the expected result with strong volume growth considerable EBITDA improvement, robust net income and operating cash flow development. Our ambition is to continue the acceleration of growth and earnings in 2019,” said Michel Puchercos, CEO of Lafarge Africa in a signed statement.
The company also effected changes in its board with the appointment of Marco Licata who is currently the general counsel for Lafarge holdings in the Middle East and Africa region as a non-executive director of the board effective from the 21st of July.
David Ibidapo & Gbemi Faminu
