Lafarge Africa, the Sub-Saharan Africa subsidiary of global cement maker LafargeHolcim, has reported its best profit after tax for the first six months of any year since 2015, adding to the show of resilience seen among cement makers including industry leader Dangote cement despite the coronavirus pandemic.
Half-year profit after tax from continuing operations hit N23.3 billion in the period, over 150% of what the cement maker made as at mid-2019. Lafarge said its outlook in the medium to long-term remains positive.
“Q2 results remained resilient with net sales of -5.1% and recurring EBIT +29.7%, compared to the prior-year period, despite the impact of the COVID-19 pandemic,” said Khaled El Dokani, Country CEO of Lafarge Africa. “The implementation of our HEALTH, COST and CASH (HCC) initiatives have delivered a considerable improvement in our performance.”
With the gradual easing of the lockdown by the Federal Government, Lafarge Africa says it would continue to focus on its business resilience to maintain a healthy balance sheet while prioritising the health and wellbeing of its people, communities and other stakeholders.
Net sales in the second quarter of the year fell by 5% to N56.85 billion from last year, as lockdowns in key Nigerian states to slow the spread of COVID-19 disrupted demand for cement and construction works. Nonetheless, cement sales for Lafarge in the half-year grew 2.3% to N120.5 billion.
In the face of slowing revenue, Lafarge Africa showed efficiency in managing its costs leading to a N42 gross profit realization from every N100 second-quarter sales compared to N36.5 seen last year.
In the six-month period gross profit grew 5.7% to N41.71 billion as direct cost remained flattish.
Notably selling and marketing expenses were lower year-on-year and administrative expenses saw a big decline which offset the drop in other income and supported operating income growth.
Recurring Earnings Before Interest and Tax jumped 29.7% to N21.17 billion in the second and 17.8% percent to N32.81 billion in the half-year. EBIT as a percentage of sales rose from 23.6% the last half-year to 27.2% in 2020.
Finance income of nearly a billion last year more-than-halved to N377 million, but was balanced out by a huge decline in finance cost to N4.4 billion from N13.3 billion last year. This had positive impacts on bottom-line.
Profit before tax rose to N28.76 billion from N15.84 billion while tax expense stood at N5.43 billion compared to a tax credit of N386 million enjoyed last year.
Earnings per share of Lafarge Africa stood at 145 kobo compared to 56 kobo last year.
On its balance sheet, total assets declined by N1.36 billion to N495.79 billion due to a decline in plants, properties and equipment and intangibles assets as well as lower deferred tax assets.
Total liabilities rose from N84.4 billion to N119 billion especially from increased loans and borrowings and higher current tax liabilities. Shareholders equity grew by 2% to N352.14 billion.