Recently, Lafarge Africa Plc, a member of Holcim, a global leader in innovative and sustainable building solutions, released its full year 2022 audited results.
The scorecard
Over the twelve months period, Lafarge Africa Plc delivered group revenue of N373.244billion in 2022 as against N293.086billion in 2021. Operating profit was N84.193billion from N65.107billion in 2021.
Finance Cost went up to N15.983billion in 2022 from N5.276billion in 2021. Net Finance Cost was N14.449billion from N3.536billion in 2021. Profit Before Tax (PBT) was N68.311billion in 2022 as against N61.787billion in 2021.
The company’s profit for the year increased to N53.647billion from N51billion in 2021. Lafarge Africa recorded net sales growth of 27.3 percent and an Earnings Before Interest and Taxes (EBIT) growth of 29.3 percent versus preceding year 2021.
Its Net Income went up by 5.2 percent amid robust free cash flow of N71.9billion. Lafarge Africa strengthened its Balance Sheet with a net cash position of N81.8billion. Though its Net Income was constrained by foreign exchange translation impact, Lafarge Africa said it will continue to focus on health and safety; and accelerate its sustainability initiatives.
Last 8 Days Trades
Trading information
The company’s shares outstanding of 16,107,795,496 units are valued at N435.715billion. At N27.05 per share as at March 6, Lafarge Africa nears its 52-week high of N33.7 as against 52-week low of N20.1. This year, the share price has risen by 12.7percent.
Proposed dividend
Lafarge proposes that a final dividend of 200 kobo per unit of 50 kobo ordinary share amounting to N32.215billion, payable from the Pioneer Reserve, will be paid to shareholders whose names are registered in the Register of Members as at the close of business on Thursday, April 6, 2023.
The Register of Members will be closed from Tuesday April 11, 2023 to Friday April 14, 2023 (both dates inclusive). On April 28, 2023, dividends will be paid electronically to shareholders whose names appear in the Register of Members as at April 6, 2023, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.
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Shareholding and substantial shareholders
The Register of Members of Lafarge Africa shows that two companies: Associated International Cement Limited (AIC UK) and CariCement BV, held more than 5percent of the Company’s Issued share capital. Holcim Limited is an international investor holding its shares in the names of its subsidiaries: AIC UK (27.77percent) and CariCement BV (56.04percemt). Total shareholding of Holcim Limited (formerly LafargeHolcim Limited) in the Company was 83.81percent as at December 31, 2022. The remaining 16.19percent of the issued shares were held by other individuals and institutions.
About the company
Lafarge Africa Plc, a leading Sub-Saharan Africa building solutions company is a member of Holcim Limited, a world leader in building solutions accelerating our world’s green transformation. Listed on the Nigerian Exchange Group, Lafarge Africa is actively participating in the urbanisation and economic growth of Nigeria, the largest economy in Africa.
Lafarge Africa has the widest footprint in Nigeria with cement operations in the South West (Ewekoro and Sagamu in Ogun State), North East (Ashaka, in Gombe State), South East (Mfamosing, Cross Rivers State) with Ready-Mix operations in Lagos, Abuja and Port Harcourt. Lafarge Africa has a current installed cement production capacity of 10.5Mtpa.
CEO’s views
“In 2022, we recorded 27.3percent and 29.3percent improvement in net sales and recurring EBIT respectively, compared to FY 2021 results. The worsening exchange rate situation led to revaluation losses, thereby constraining our Net Income growth to 5.2percent”.
“We remain committed to our sustainability ambitions by utilising affordable clean energy in our operations and optimizing our green logistics strategy; among other initiatives that are in alignment with our net zero pledge journey,” said Khaled El Dokani, CEO of Lafarge Africa.
Outlook for 2023
On the 2023 outlook, Lafarge Africa expects good demand momentum in 2023, albeit moderated due to the impact of the general elections. It plans to continue to maximize volume opportunities across their markets and actively manage their costs. In 2023, it expects to consolidate its efforts on sustainability.
Analysts’ comments
“Lafarge recorded a decent 27.3percent year-on-year (y/y) increase in revenue as its profit after tax (PAT) improved by 5.1percent y/y in FY-2022, however, limited by a 314.3percent y/y upsurge in finance costs for the period (with foreign exchange losses printing at N13.1billion from N0.0bn in FY-2021). Lafarge also announced a proposed dividend of N2 per share,” United Capital analysts said in a March 6 note.
“Lafarge Africa (WAPCO) released its FY 22 audited results after trading hours on Monday (27 February). The company reported an EPS growth of 122.4percent year-on-year (y/y) in fourth-quarter (Q4) 2022, however FY 22 EPS grew by 5.2percent y/y. The company proposed a final dividend of N2.00/s, translating to a dividend yield of 7.3prcent based on the closing price of NGN27.40 (01 March).
“Earnings were driven by double-digit growth in price and sales volumes in Q4 22, offsetting elevated Selling and Distribution costs and Net finance cost. The achieved EPS is 16.2percent above our forecasts for FY 22. The market’s reaction to the results has been bullish as the stock gained 5.38percent post-release. Year-to-date, the stock is up 14.2percent,” Adebayo Adebanjo, analyst at Coronation Asset Management said in a March 2 note.
“Lafarge Africa’s revenue performance in FY 22 was above our expectations (+2.7percent variance). While its achieved volume output was slightly below our FY 2022 forecast by 1.79percent, given its focus on capacity utilisation, we note that the company, like its peers, was able to take advantage of elevated prices.
“Going Into 2023, we believe the company is positioned for growth as it ramps up output on the back of the de-bottlenecking exercise strategy. In the short to medium term, given industry-wide disruption in gas supply, we expect the company to continue to rely partly on diesel for production and distribution activities, pressuring bottom line. In addition, following the expiration of its pioneer status, we expect its effective tax rate to be restored. Our estimates are under review,” the Coronation analysts further noted.
Abigail Alabi, equity research analyst at Vetiva said in a March 3 note that, “Following the industry-wide energy disruption that constrained volumes and the harsh effect of the FX crisis, we expect Lafarge to intensify efforts to improve its fuel mix and cost optimization, using alternative fuels and other means of distribution in a bid to preserve margins.”
“Furthermore, should the energy situation worsen, we expect this to restrict volumes, despite the ongoing debottlenecking process to free up additional capacity. That said, in the near term, we expect cement prices to remain elevated to reflect the impact of the current inflationary trend and mask the possible slowdown in volumes. Finally, we estimate that revenue and PAT will grow by 5.7percent year-on-year (y/y) and 8 percent y/y to N394 billion and N58 billion, respectively. We value Lafarge at a 12-month target price (TP) of N31.92 and place a BUY rating on the stock,” the Vetiva analyst said.
