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Monday, February 6, 2023

BUA Cement predicts N35.6 bn in Q3 2022 profit.

BUA Cement Plc has informed the stock market of a likely profit after tax (PAT) of N35.6 billion in the third quarter of 2022(Q3 2022).

According to data sourced from the Nigerian Exchange Limited (NGX), the PAT is to be achieved after some expenses which include a projected selling and distribution cost of N4.5 billion, administrative expenses of N2.2 billion, financial expenses of N2.8 billion, and income tax of N7.3 billion has been deducted in Q3 2022.

The cement giant, whose flagship brand is the “Elephant”, expects sales revenue to hit N109.79 billion, while the cost of sales should be moderated well enough to hit N52.985 billion.

BusinessDay analysis of the company’s first-quarter report ending March 2022 shows it reported a 48 percent increase in profit to N33.14 billion from N22.4 billion in the same period last year, the highest in four years.

It saw its revenue surge 58.5 percent to hit N96.99 billion, from N61.19 billion in the first three months of 2021.

The company’s first-quarter 2022 revenue was the highest since 2019 with a huge increase of 124.9 percent from N43.13 billion in that period.

Finance costs recorded by the cement producer totalled N30.31 billion, a 96.5 percent decline from N878.73 in the period under review.

The cement company’s cost of sales rose by 52.18 percent amounting to N48.79 billion during the quarter, as against N32.06 recorded in the same period of 2021.

AIHS 2022

The cement producer incurred selling and distribution costs amounting to N3.24 billion, a whopping 107.7 percent increase from N1.56 billion in the period under review.

Read also: Construction business favours BUA cement as Q1 profit hits 4-year high

Administrative expenses incurred by the company also surged to N2.76 billion in Q1’2022, representing a 41.54 percent increase from N1.95 billion in Q1’2021.

It incurred an income tax of N9.2 billion in Q1 2022, an increase from N2.4 billion in the same quarter last year.

Oluwasesan Adeyeye, an analyst at CSL Stockbrokers Limited, attributed the growth in revenue to the increase in volumes and pricing during the first quarter of 2022.

Adeyeye said, “unlike where Dangote cement and Lafarge struggled to increase volume due to gas constraints, BUACEMENT recorded volume growth of 26.2 percent year on year to 1.73 million tonnes in Q1 2022.”

“Apart from that, it also achieved price growth of 25.6 percent year on year, which together cascaded into a 58.5 percent growth in revenue to N96.99 billion in Q1 2022,” he added.

Although, most analysts say 2022 might not be such an easy year for most cement makers as the rising oil prices would mean the industry would have to battle with high energy costs.

However, a recent report by Chapel Hill Denham stated that the shortage of Low Pour Fuel Oil (LPFO) in 2017 birthed a new era of energy diversification drive that makes the cement sector energy-efficient and insusceptible.

BUA currently has c.48MW of electricity generator, which previously ran on liquid fuel (diesel); and a good portion of it has been replaced by liquified natural gas

Source- Businessday

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6th February 2023