Lafarge Africa plc revenue hit N267 billion, up 2%

Lafarge Africa Plc, a leading cement and building solutions provider, has now reported its 12 months 2015 results, with revenue up 2 percent against last year’s reaching N267 billion, in a challenging transitional market.

South West operations grew by 8 percent behind a number of initiatives such as the Key Distribution Scheme, a strong route to market and solid capacity utilization.

Ready Mix Nigeria continued its strong growth with a 29 percent increase over prior year.

South African revenues grew by 7 percent in the last quarter.

Ashaka operations are normalized, following the security challenges in the region which affected demand for cement in the North. Management remains very optimistic about the long term outlook for Ashaka, which is foreseen to return to strong growth in 2016.

Plant operations were mostly stable with gas utilization in the 90s in South West and Mfamosing operations. The South African cement operations returned to growth in Q4 with production up by 28 percent vs. last year, following the kiln overhauls in Q1 2015.

Group after tax profit declined by 20 percent versus last year, when taking into account the one-off restructuring costs and the unrealized exchange impact on the Mfamosing operations foreign currency borrowings from the parent group, LafargeHolcim, the world’s largest building materials company.

The one-off impact of the adjustment to the naira value of the foreign currency borrowing, due to the deterioration in the naira exchange rate, is to a large extent an accounting exercise.

Excluding these one-off/none operational impacts, profit improved by 6 percent versus last year behind the strong underlying fundamentals of Lafarge Africa Plc’s operations.

Cash flow from operations was robust at N57.9 billion.

The Nigerian operations of Lafarge Africa have been successfully unified and rationalized under one management team while being cognizant of the different stakeholders.

Lafarge Africa has strengthened its foundation further by increasing its shareholding in Mfamosing operations from 35 percent to 50 percent, with full management control and consolidation.

Similarly, the shareholding in Ashakacem Plc also increased from 58.61 percent to 82.46 percent in the year.

The unified management team promises to drive efficiencies and ultimately generate synergy savings of N9 billion for the group by mid-2018.

Commenting on the results, the CEO of Lafarge Africa Plc., Peter Hoddinott said “our company continues to deliver good performance with significant upsides to come as new cement and power generation capacities come on stream and synergy benefits from the merger in Nigeria flow through. Our business integration process has been successful and as a Company we are optimistic to deliver improving performances in 2016 and beyond, improving value to our shareholders”.

Future Outlook

The overall Nigerian cement market is foreseen to grow robustly in 2016 behind a strong Individual Home Building Segment.

The Federal Government of Nigeria has also shown strong indications to support Infrastructure growth in the coming year. Lafarge Africa will be able to leverage its unique footprint in 2016 with Ashaka returning to growth, ReadyMix securing high volume contracts to support its 8 existing, and new plants to be commissioned as well as the new 2.5 million tons cement line due to be commissioned in Mfamosing in H2.

The South African market will remain challenging, but Lafarge Africa will leverage the 2015 investments within the cement operations with a revamped sales team and route to market.

In aggregates, the company will continue to benefit from its strong network delivering results with two new quarries, being opened in the Gauteng market and Ready-Mix growth.

Overall, new strategies in penetrating retail, new geographies and the technical segment are expected to allow Lafarge Africa volumes to grow above a flat market in all three product lines.

Overall, the Lafarge Africa group will continue to seek innovative ways of improving product offerings in the Nigerian cement, concrete and aggregate market in 2016.

 

PATRICK ATUANYA