Cement Company of Northern Nigeria (CCNN) Plc, the country’s third-largest cement producer by market value, improved efficiency in turning each naira in revenue to higher profit, as net margin rose to its highest level in eight years. Thanks to a surge in top and bottom-line.
Figures from the company’s financial results for mid-year 2019, revealed that net margin grew to 22.7 percent in the review period, compared to 21.5 percent in the previous comparable period. This is the highest since 2012.
Net margin is a key indicator of a company’s financial health that measures how much profit is generated as a percentage of revenue. Investors use this yardstick to assess if a company’s management is generating enough profit from its sales and whether operating and overhead costs are contained.
Sales revenue of the cement maker nearly tripled to N32.1 billion in the first six months of 2019, representing 166 percent surge over N12.1 billion, slightly underperforming direct cost of production that grew 168 percent to N17.8 billion.
Consequently, after-tax profit appreciated in three folds to N7.3 billion in the review period from N2.6 billion last year.
Between April and June 2019, the cement maker realized N15.3 billion, expended N8.6 billion on production cost, paid N1.4 billion on administrative expenses and retained N3.6 billion as profit after taxation.
Meanwhile, the rout on the Nigerian Stock Exchange (NSE) fuelled by investor weak sentiment over the growth potentials of the economy as well as listed corporates has pushed some stocks to fresh lows.
And the cement maker is no exception as its shares are trading at their lowest price of N11.6 since January 2018.
Year-long, it shed 40.21 percent equivalent to a monetary loss of N102.4 billion, to underperform the Lagos benchmark index that is down 11.17 percent. Shares of CCNN has declined the most compared to other cement makers – Dangote Cement (-10.38%) and Lafarge (+15.66%).
Despite interest on loans and bank charges surged 17 percent and 137 percent respectively, net borrowing costs contracted 18 percent on the back of N43.8 billion interest earned on deposits with the bank.
The total indebtedness of the company dipped 24 percent to N322.8 billion for the period ended June 30 2019, from N425 billion last year. The company has short and long-term obligation of N220.2 billion and N102.6 billion respectively to Bank of Industry.
The company’s total assets appreciated some 3 percent or N9 billion mid-year 2019 while shareholders’ equity and total liabilities expanded 12 percent and 2 percent respectively.
Snapshot of the CCNN’s statement of cash flows revealed that the cement maker had cash worth N4.6 billion in the first half of the year, almost tripling N1.6 billion a year ago. Breakdown revealed that a large chunk of the sum was kept in deposit accounts.
In a bid to expand operations and exploit Nigeria’s growing cement industry, CCNN merged with Kalambaina Cement, which saw total production capacity quadrupled to 2 million metric tonnes (MT) from 500, 000MT.
Presently, it is the only cement manufacturer in the North-western part of Nigeria, giving the company easy access to markets in Sokoto, Kebbi, Kano, Kastina, Kaduna and Zamfara states.
Israel Odubola
