Lafarge Africa suffers 43% drop in profit

Lafarge Africa Plc has released its audited consolidated financial statements for the year ended December 31, 2014, reporting a 43 per cent drop in profit after tax for the year.

The results, which the company filed with the Nigerian Stock Exchange, showed that its PAT declined from N60.953bn in 2013 to N34.660bn in 2014.

The company also reported a 36 per cent drop in profit before tax with the PBT dropping to N41.198bn from N64.261bn a year earlier.

Its revenue was little-changed at N205.845bn for 2014, 0.1 per cent less than the N206.073bn it realised in 2013.

Formerly known as Lafarge Cement WAPCO Nigeria Plc, Lafarge Africa, was created last year following the combination of all of Lafarge’s Nigerian operations – (Ashaka Cement Plc, United Cement Company Limited, Atlas Cement Company Limited) – and Lafarge South African Holdings Limited assets.

Lafarge Africa, however, explained in a statement that its PAT grew by eight per cent “when adjusting for one-offs in 2013 and the UNICEM scope change.”

It said the operations of UNICEM had been included on an equity basis in the fourth quarter of 2014, with N49bn generated from the operations.

The company also explained that the Nigerian operations showed a growth of eight per cent, cushioning the short-term market challenges in South Africa.

Analysts at FBN Capital Research, who said the Lafarge Africa’s full-year PBT and PAT were behind consensus forecast of N50bn and N41bn, respectively, explained that a gross margin contraction of of 748 basis points year-on-year and to 28.2 per cent combined with a N2.5bn share of loss from associate UNICEM were major drivers of the sharp contraction in on the PBT line.

Lafarge Africa’s Board of Directors has, however, proposed a dividend payment of N3.60, which is nine per cent higher than the dividend it paid a year ago. The dividend will be presented to shareholders for approval at its AGM on May 22.

The Chairman of the board, Chief Olusegun Osunkeye, was quoted as saying that the performance despite the volatility in the economy highlighted the company’s strength.

He was quoted as saying, “It is with pleasure that we publish the first audited results of our newly transformed company. The good performance even in a volatile market affirms the strength of our new Company and our commitment to achieving excellence.”

The Group Managing Director and Chief Executive Officer, Lafarge Africa, Mr. Guillaume Roux, was also quoted as saying the performance was impressive.

He added, “Our business combination plans have been well executed within set timelines. We are committed to improving operational performance by leveraging on opportunities this presents to us to deliver sustainable returns to our shareholders.”

The company expressed confidence about the future, saying, “We expect cement demand to increase both in Nigeria and South Africa in 2015. In Nigeria, the demand growth should be supported by increasing needs for housing and infrastructures, but could be lower than normal growth levels given the exchange rate development.

“This should be partly cushioned through the South African cash flow. We remain very optimistic and highly committed to delivering innovative building materials while leveraging on the operational strength and pedigree of the Lafarge Group.”


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