Nigeria’s cement maker says it may increase price

One of Nigeria’s biggest cement producers, BUA Cement Plc, has said it may raise the price of the commodity following the increase in the cost of production.

The company disclosed this in its 2019 audited financial statement obtained by Markets Reporters from the Nigerian Stock Exchange.

“Cost of production in 2020 will invariably increase with the convergence of multiple exchange rates into a single exchange rate regime which saw the official exchange rate increase from N306 to N360, although the likelihood of passing the increase to consumers is quite high when things normalise, except if the economy enters into recession,” it said.

BUA Cement said the coronavirus pandemic had impacted the dispatch of cement to parts of the country.

It said, “In the light of these recent developments and the underlying impact, the company, despite continuing operations is not completely insulated from the impact of COVID-19 as sales dropped in March 2020 by less than five percent when compared to the previous month. 

“The extent of further drop depends on the curtailment of the virus spread, future actions of the government and the state of the economy, hence cannot be reasonably estimated as at now.”

The company said its management had also considered the potential implications of the outbreak and had put in place measures to mitigate against a significant impairment of the carrying value of assets.

It said, “As of the date of this reports there are no plans to liquidate any of the company’s operations or to cease trading.

“However, it is reasonably possible, based on existing knowledge, that outcomes within the next financial year that are different from assumptions used for some estimates and judgement, and could require a material adjustment to the carrying amount of the asset or liability affected.”

BUA Cement was converted from a private limited liability company to a public limited liability company on May 16, 2019, as a prelude to a scheme of merger. It later merged with the defunct Cement Company of Northern Nigeria Plc on December 23, 2019, and was listed on the NSE on January 9, 2020. 

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