BUA Cement’s quarterly profit rises to N22.37bn

BUA Cement Plc has reported a profit after tax of N22.37 billion for the first quarter of 2021, 13.03 percent higher than the N19.79 billion recorded in the same period of 2020.

The cement maker’s profit before tax increased to N24.77 billion in Q1 2021 from N20.13 billion in Q1 2020, according to its unaudited financial statements.

Its revenue rose to N61.19 billion in the period under review from N53.97 billion in Q1 2020.

Cordros Capital Limited, in a report on Wednesday, noted that the 13.4 percent revenue growth was driven by the combination of increases in sales volumes (3.5 percent year-on-year) and price per tonne (9.6 percent y-o-y).

“We believe the higher growth in price per tonne than volumes indicates that management offered lower discounts to key distributors. The management action may have been necessitated by the need to mitigate the impact of the local currency devaluation on margins,” it said.

According to the report, the double-digit revenue growth is consistent with results from the other players in the industry – Dangote Cement Plc (+33.5 percent) and Lafarge Africa Plc (+12.2 percent).

Cordros said, “Although we are not impressed that the revenue growth was price-driven, we think the need to preserve margins due to higher energy cost must have compelled management to review its pricing strategy. However, we anticipate that the Kalambiana line II 3MMT set to come on stream in H2-21 will result in economies of scale that will impact margins positively.

“As we expressed with the other players, we are concerned that the significant upward movement in yields in the fixed income is likely to cause a slowdown in activities in the real estate sector. The preceding will put some brakes on private sector demand for cement.”

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