Cement battle: Lafarge outshines Dangote, BUA in profit growth

Lafarge Africa Plc, the third-biggest cement manufacturer in Nigeria, recorded the highest growth in earnings last year, outperforming its two biggest rivals, Dangote Cement Plc and BUA Cement Plc.

MarketsReporters analysis of data from their latest audited financial statements shows that Lafarge’s after-tax profit surged by 96 percent, while BUA and Dangote saw their earnings rise by 6.3 percent and 10.4 percent respectively.

This comes amid the ongoing sale of Holcim’s 83.8 percent stake in Lafarge Africa to Huaxin Cement that is expected to be completed this year. Experts say the Chinese acquisition deal valued at $1 billion could further improve Lafarge’s performance and stir up more competition in the country’s cement space.

In 2023, Dangote was the only one among the three cement producers that saw a growth in earnings. Its after-tax profit rose by 19.2 percent, while Lafarge and BUA saw declines of 31 percent and 4.7 percent respectively.

“I am excited to report our record-breaking revenue of N697 billion and PAT of N100 billion for the full year 2024, a testament to our strong market positioning, operational efficiency, cost management, and dedication to value creation,” Lolu Alade-Akinyemi, CEO of Lafarge Africa, said in the company’s earnings statement.

He said despite a challenging business environment, the company has remained resilient, leveraging innovation and green growth in line with its sustainability ambitions, while also delivering value to its stakeholders.

Last December, Holcim Group, a Swiss multinational company, announced that it had signed an agreement to sell its 83.8 percent shareholding in Lafarge to Huaxin Cement Limited, one of China’s largest cement manufacturers.

The company, listed on the Shanghai Stock Exchange, has been expanding in Africa since 2020, with the acquisition of Kenya’s ARM Cement unit in Tanzania. In 2021, it completed the acquisition of 75 percent and 100 percent stakes in Lafarge Zambia and Lafarge Cement Malawi respectively. The company snapped up the South African and Mozambique assets of Brazil-based InterCement Participacoes SA in 2023.

Lolu Alade-Akinyemi said the “transition provides an opportunity” for the company to “continue growing and evolving, supported by the investment and global expertise of Huaxin Cement”. “Our market position and long-term market potential are promising,” he said in a statement.

A Lagos-based analyst told MarketsReporters that the deal could improve the performance of Lafarge Africa, which has an installed capacity of 10.5 million metric tonnes per annum.

“China is the top cement producer in the world, with Huaxin being among the top 10 manufacturers in China,” she says.

Dangote Cement, Nigeria’s largest cement producer, boasts a domestic production capacity of 35.3 million metric tonnes per annum (mtpa), with an additional 16.7 million mtpa across nine other African countries. Second-placed rival BUA Cement earlier last year commissioned the fifth line at its Sokoto plant and the third line at its facility in Obu, Edo State, as part of its expansion drive. BUA aims to increase its installed capacity to 20 million mtpa from 17 million mtpa currently.