In a way to show investors’ approval and reaction to the sale of Lafarge South Africa Holdings to Lafargeholcim Group, coupled with the improved financial position of Lafarge Africa Plc, investors on Tuesday bought the company’s stock leading to higher share price.
As at the end of trading on Tuesday in Lagos, Lafarge stock price rose 9.92 percent to its highest in the last 8 months at N14.40, raising its year-to-date returns to 15.66 percent.
Lafarge Africa, Nigeria’s second-largest cement maker, returned to profitability in the first half (H1) of 2019, following a 40.7 percent decline in the cost of funds that helped boost the firm’s bottom line despite a mild decline in revenue.
Lafarge’s net income rose by 246 percent to exit its loss position of N6.34 billion in the corresponding period of 2018 to a profit after tax of N9.27 billion in 2019, according to the company’s report released to the Nigerian Stock exchange (NSE) Monday.
This was on the back of a 41 percent decline in finance cost to N14.05 billion in H1 2019 from N23.71 billion in H1 2018, while the company cut considerably its expenses during the period under review.
Mobolaji Balogun, Chairman, Lafarge Africa said at the company’s Annual General Meeting (AGM) held on Monday, that the company has realized so far a sum of $114 million from its move to deleverage its South African holdings.
This $114 million is said to have been used to refinance the company’s debt and boost its operational performance. This was evident in Lafarge’s interest borrowing falling by 16.25 percent to N13.4 billion in H1 2019 from N16 billion in H1 2018.
Also bank overdraft for the firm dropped to N964.7 million from as much as N1.5 billion the same period last year.
Like every other firm, Lafarge Africa had its own fair share of economic and business headwinds, evident in the last 5 quarters after the second-largest cement maker by market share recorded losses consecutively due to the poor performance of the South African unit.
Its parent company, Switzerland-based Lafargeholcim, agreed to purchase the shares for the consideration being a set-off of all the outstanding amounts due by the company to Caricement under the InterGroup Loan Agreements at the closing date, which is July 31, 2019.
This is coming after the Securities and Exchange Commission (SEC) approval for the merger between Lafarge Africa Plc and Lafarge Ready Mix Nigeria Limited.
