BUA Cement ride on construction uptick to record 23% growth in 9-month profit
The full re-opening of the Nigerian economy following the ease in lockdown restrictions and increase in investors’ appetite for the real estate and construction markets amid the low-interest-rate environment has helped BUA Cement, Nigeria’s second-largest cement maker to report its highest profit in two years.
The cement company reported a 23.22 percent increase in its profit after tax in the period ended September 30 2021, to N65.91 billion from N 53.49 billion in the same period of 2020.
Compared to the N43.25 billion profit reported in the nine-month of 2019, before the outbreak of the pandemic, the N65.91 billion recorded by BUA Cement in 2021 is 52.39 percent higher.
Revenue from sales of cement, the core business of BUA cement, increased by 19 percent to N186.91 billion in the review period from N156.55 billion in the comparable period of last year.
This was despite the 52.87 percent increase in the company’s administrative expenses to N6.13 billion in the period under review from N4.01 billion in the same period of 2020.
BUA Cement also reported 1.1 percent net assets decline to N372billion from N376billion.
According to industry players, the growth in the real estate and construction sectors amid the resumption of projects is boosting the sales of cement and consequently, driving the performance of cement makers.
Nigeria’s real estate sector expanded by 3.85 percent in the second quarter of 2021, the highest second-quarter growth the sector has recorded since the 4.95 percent growth in Q2 2014, as analyzed from data by the National Bureau of Statistics (NBS).
Compared to the corresponding quarter of 2020, when Nigeria’s property sector contracted by 21.99 percent, the 3.85 percent GDP growth reported in the second quarter of this year is higher by 25.84 percentage points, and 2.08 percentage points higher relative to Q1 2021.
Analysis of the NBS data showed that the 3.85 percent growth reported in Q2 2021 is the fourth positive GDP value the sector has recorded in the last five years. The first positive value was reported in Q1 2019, the second was in the fourth quarter of 2020 when the sector exited an almost two-year recession and the third was the first quarter of 2021.
“This shows investors’ confidence in the Nigeria Real Estate Sector as a subsector of the economy which thrives despite the current inflation and devaluation of the naira,” Freeman Osonuga, Real Estate Investor, Advisor and Best-Selling Author, said.
The construction sector, on the other hand, grew year-on-year by 3.70 percent, higher by 35.46percentage points from the -31.77 percent recorded in the comparable quarter of 2020.