Lafarge Africa posts N29bn profit in H1, lowest in three years

The half-year earnings of Lafarge Africa Plc, dropped to the lowest in three years, data compiled by BusinessDay shows.

According to the company’s latest unaudited financial result, its after-tax profit fell by 17 percent to N29 billion in H1 this year from N35.4 billion in the same period of 2023, driven by finance cost.

The company’s finance cost increased significantly to N33.3 billion in H1 compared with N1.4 billion recorded in the previous year due to the continuous devaluation of the Naira.

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A breakdown of the finance cost revealed that foreign exchange loss accounted for 58 percent of the total cost. In the reviewed period FX loss rose to N19 billion, followed by bank charges and interest expense on borrowing amounted to N12 billion and N429 billion, respectively.

Analyst at Cardinal stone in a note on Tuesday said, “Cost pressures, FX revaluation losses, and a higher effective tax rate masked topline growth.”

During the period, revenue growth was strong at 49.5 percent to N295.6 billion, driven by higher revenue per tonne and volumes.

However, cost of goods sold grew at a faster pace 56.9 percent to N147 billion due to a 64.5 percent increase in production variable costs, which included energy and raw materials costs. Subsequently, the gross margin contracted by 49 percent to N147 billion from N103 billion.

Cardinalstone disclosed that “Operating expense remained elevated (36.6 percent year-on-year) due to rising distribution costs and a 3.3x surge in office and general expenses. However, a 290.0 percent year-on-year increase in other income — from government grants, gains on PPE disposal, and the sale of scraps — offset the higher OPEX, slightly improving the EBIT margin by 0.2ppts to 26.7 percent.

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The company’s earnings per share EPS) declined by 17.3 percent to N1.82 from N2.20, this drop was driven by the substained FX loss reported in the first quarter of 2024.

During the period, the total assets of the company rose to N735 billion, total liabilities rose to N301 billion and the company’s shareholders funds surged to N433 billion.