Mobolaji Balogun is the chairman of Lafarge Africa plc. In this interview, he speaks on some of the progress recorded by the cement maker in recent times. He also discloses why the South Africa Holdings was sold, assuring shareholders of better times ahead.
Resolutions passed at the recent annual general meeting
I think these resolutions were extremely important. This has really been a momentous year for us as a business, in terms of some of the progress we have made on some of the key strategic issues that we have had to deal with.
Influence of ongoing restructuring on Lafarge Africa
We have reduced our debt further by about N89 billion following the success of our rights issue at the beginning of the year. You will see the impact in the 2019 half-year result. We have also approved, more importantly, a decision to sell Lafarge South Africa Holdings.
Reasons for offloading Lafarge South Africa Holdings
Lafarge South Africa was part of our business which was not performing well at all, and for a number of reasons, we have worked hard to turn it around. Unfortunately, we have not been able to do that successfully. The decision to sell it is for the good of the Nigerian business and minority shareholders.
Influence of Lafarge South Africa’s sale on Lafarge Africa going forward
We sold Lafarge SA Holdings for approximately N114 billion but when you also deconsolidate the debt related to Lafarge South Africa, you are talking about another N45 billion of debt. The total impact on our company is somewhere around N159 billion reduction in our debt.
Strategy for growth sustenance
We started this year with more than N260 billion of debt, but by the time we get to the end of September, the debt in this company, netted, will be much less than N55 billion. I think that is a major transformation for this business. You will see the impact flow through into the company’s cash flow, into the company’s profitability, and that can only be a good thing for our shareholders. It will also provide us the platform now to focus on the market that we know, which is the Nigerian market, and to invest significantly in this market to maintain our market share.
Assurances for shareholders
We would release the half-year result and you will see that the direction of travel is now clear. That half-year result does not include the South African transaction that has just been approved.
Impact of restructuring on remaining months in 2019
I think what you will see when you put the last two quarters of the year together is that the work of transformation that we have done is extremely advanced. There is still a lot of work to be done on our cost structure but I can assure you that we are making good progress in that respect.
Pricing and competition strategies
Pricing is never the right way to compete. I think what is important for all of us in the market is to recognise that Nigeria will become one of the largest markets for cement countries across the world. This country will need to build a tremendous amount of infrastructure and housing over the next decade of twenty to thirty years.
If you have to do that, all of the operators have to invest. If you have to invest and get returns on investment, then it is important that we compete on products, we compete on brand, we compete on market, we compete on route to market, we compete on service but we are not competing on price.
