BusinessDay

BUA Cement rides on construction uptick to hit highest profit in 4 years

 

BUA Cement Plc, Nigeria’s second-largest cement company recorded its highest profit in four years, helped by sundry income, amortisation of deferred income and the company’s sales of cement, analysis by BusinessDay has shown.

The cement company’s profit jumped 26.8 percent to N91.7 billion in the full year 2021 compared to N72.3 billion in the corresponding period in the previous year.

Revenue surged to N257.3 billion compared to N209.4 billion in the previous year.

Further analysis by BusinessDay shows Sundry income grew massively by 446 percent to N194.4 million in the full year 2021 from N35.6 million in the full year, 2020 while Amortisation of deferred income rose to N1.14 billion in 2021 compared to N229.4 million in the previous year.

The company’s sales of cement jumped to N257.3 billion, a 22.8 increase from N209.4 billion in the corresponding period last year.

“The cement makers have been compelled to increase price significantly just to preserve margins from the impact of FX devaluation,” said Gbolahan Ologunro, a research analyst at Lagos-based Cordros.

According to the International Cement Review, retail cement prices in Nigeria reportedly rose from around N2,400-N2,600 per 50kg bag in 2020 to N3,500 at the end of April 2021 and sold for around N4,000 towards the end of the year.

Ologunro said since the third quarter of 2020, there had been strong demand from the private sector as individuals increased activities in the real estate sector.

Gross profit surged N120 billion in 2021, a 25.7 percent increase compared to N95.4 billion in the previous year.

Furthermore, the cost of sales increased by 20.3 percent to N137.2 billion from N114 billion in the comparable periods.

Read also: Cement makers see profit surge to 10-year high

Assets dropped to N728.5 from N766.3 in the period under review.

Administrative expenses stood at N8.7 billion in the year ended 2021, compared to N8.1 billion in the previous year ended.

Selling and distribution cost surged to N8 billion from N7 billion in the comparable periods. Inventories also increased by 30 percent to N41 billion in the full year 2021 compared to N31.5 billion in the full year 2020.

The company’s cash generated from operations, which indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling grew by a whooping N139.6 percent to N156 billion compared to N65.1 billion in the previous year.

However, the cement company’s net finance cost dropped to N528 million in the full year 2021 from N3 billion in the full year 2020.

BUA cement’s cash flow used in investing activities, a section of the cash flow statement that shows the cash generated or spent relating to investment activities, dipped 52 percent to N61.7 billion compared to N129 billion in the comparable periods.

Also, Cash flow used in financing activities, a section of a company’s cash flow statement, which shows the net flows of cash that are used to fund the company. Financing activities dropped to N154.6 billion in full-year 2021 from N172.5 billion in the full year 2020.

Earning per share rose to N271 naira from N214 naira in the comparable period.

Recall, last month, President Muhammadu Buhari applauded the BUA Group for its strides in narrowing the gap between demand and supply of cement in the country, as the company moves to pump additional 6 million tonnes into the market.

BUA Cement Plc is a publicly listed firm headquartered in Nigeria, produces and markets cement products in the country.

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