BUA Cement’s half-year profit plunges despite big cement price hikes

BUA Cement’s post-tax profit saw a big dive in the first half of the year, diminishing by almost half of what it booked a year earlier.

The performance highlights how huge increases in the price of cement during the period are not translating to strong earnings for Nigerian cement-makers, amid record inflationary pressures.

Nigeria’s second-biggest cement manufacturer reported N34.3 billion in net profit, which declined from N63.6 billion, according to its newly issued earnings report, even though topline was up by nearly 65 per cent.

Fiercest competitor Dangote Cement, days earlier, posted a flattish growth in profit despite a record revenue that rode on the back of a cement price boom rather than an increase in sales volume.

Direct costs of production leapt 131.4 per cent to N138.5 billion, leaving gross profit marginally higher. Here, the main pressure point was energy cost, which soared 171.7 per cent, accounting for more than half of cost of sales.

The corporation which, according to its managing director, controls over 30 per cent of the country’s cement market, is on track to beef up capacity to 20 million tons per annum, with a new plant in Sokoto under proposal.

Administrative expenses rose by more than four-fifths, while selling & distribution costs climbed 16 per cent higher as headline inflation in Nigeria ascended to its peak in 28 years during the period under review.

Wearing away at bottom line, foreign exchange losses surged roughly nineteen times to N40 billion year on year.

Profit before tax stood at N40.1 billion, compared to N76.4 billion a year ago.

The stock has not witnessed any price movement since 21 March, stuck at N143.20 per unit, and has returned 47.6 per cent since the start of the year.

The company currently has a market valuation of over N4.8 trillion, while total assets stand at N1.4 trillion.

Billionaire tycoon Abdul Samad Rabiu holds a 97.7 per cent interest in the entity: 57.9 per cent directly and 39.8 per cent on behalf of BUA Industries Limited, the conglomerate he controls, which has tentacles in food processing, ports & terminal services, real estate, logistics and agriculture.

The group’s latest bet is an oil refinery and petrochemical plant project in Akwa Ibom State. It is expected to process 200,000 barrels of crude per day when completed.