Lagos, Nigeria ~ BUA Cement Plc, Nigeria’s second-largest cement company, has recorded a 47.5% increase in revenues of N175.52 billion in its just-released Full-year results for the 2019 Financial Year on the Nigerian Stock Exchange. The company’s Profits also increased by 69.1% from N39.17 billion in 2018 to N66.24 billion in 2019. BUA Cement Plc in its current form is a business combination between CCNN Plc (Sokoto Cement) and BUA Cement Manufacturing Company’s Obu Cement Company which was completed in January 2020 and is currently listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of N1.18 trillion ($3.3 billion), making it the third most capitalised company on the floor of the Exchange.
Speaking on the result, Managing Director of BUA Cement, Yusuf Binji said, “Through the adoption of a focused and disciplined approach, we continue to record strong revenue growth, even as we derive revenue and cost synergies from the merger across: pricing, scale, and operational efficiencies; all supported by a sustainable business model and a value-oriented strategy, which have translated to growing market acceptance and is reflective in our margins. This is Despite the complexities and uncertainty that trailed the economic environment in 2019. We delivered on important strategic priorities, such as: the commissioning of our 3mmtpa Line-2 at our Obu Plant in March 2019; the merger completion between CCNN Plc and Obu Cement Company Limited and commenced the listing process of BUA Cement Plc, the resultant entity of the merger on the floor of the Nigeria Stock Exchange (NSE), with the eventual delisting of CCNN Plc.
“Going forward, our focus is to further harness the full benefits of the merger while making further in-roads to “new markets” both locally and outside Nigeria. We understand that the local and indeed the global economy would experience more uncertainties, yet we expect continued strong showing across the business, spurred-on by continued recovery across the global economy”.
In his comments Acting CFO, Chike Ajaero said, “In 2019 we reported a decline in Profit after Tax (PAT) from N64.07 billion in 2018 to N60.61 billion which was due to income tax credit of N26.76 billion in 2018 from the reversal of previous tax provision made on Obu Line 1 and deferred tax credit on securing approval for tax exemptions under pioneer status incentive in 2019. Net deferred tax charge of N5.15 billion was provided for in the current year and actual tax payable of N475.29 million. Obu Line-1 and Kalambaina Line -2 are both on pioneer status approved in February 2020 for 2-years (extension) and 3-years respectively. The computation of Earnings per Share (EPS) for 2018 has been re-stated, to reflect a business combination under common control, as at January 2018”.
It should be noted that BUA Cement Plc is Nigeria’s second-largest cement producer and the largest producer in its North-West, South-South and South-East regions; with a combined installed capacity of 8 mmtpa and with plans underway to increase existing capacity to 11 mmtpa, through the commissioning of a new 3 mmtpa plant by the first half of 2021 in Sokoto State, Nigeria. BUA Cement operates strategically from Okpella, Edo State and Kalambaina, Sokoto State and is committed to quality – a differentiating attribute, driven by its people, innovation and technology; and positioned to solving Nigeria and Africa’s challenges while driving economic growth and development.
I. Financial Highlights
- Revenue increases by 47.5% from N119.01 billion in 2018 to N175.52 billion in 2019
- EBITDA rises 47.2% from N55.70 billion in 2018 to N81.99 billion in 2019
- EBITDA margin flat at 47.0%, arising from entry into ‘new markets’
- Operating margin (EBIT) is up 4.71% points from 36.0% in 2018 to 40.7% in 2019
- Profit before Tax (PBT), up 69.1% from N39.17 billion in 2018 to N66.24 billion in 2019
- Profit after Tax (PAT), down 5.40% from N64.07 billion in 2018 to N60.61 billion in 2019, due to a tax credit of N26.76 billion in 2018 from pioneer status incentive( 3 years) granted on Obu line-1 in 2019, reversing previous tax provision for the years
II. Operational Highlights
- Cement volume dispatched was up 53.2% from 2,940 kt in 2018 to 4,501 kt, as at 2019; arising from increased capacity
- Merger between CCNN Plc and Obu Cement Company Limited, yielding revenue and cost synergies
- Kalambaina plant, Sokoto State (Line 2) goes online for first full year in 2019; Obu Cement Plant, Edo State (Line 2) commissioned in March 2019
- Return on Asset (ROA) up from 16.7% (2018) to 17.7% (2019)
- Entry into new markets aided by a value-oriented strategy
III. Key Developments
- The appointment of Alhaji Abdulsamad Rabiu, CON as the Chairman of the Board, effective December 23, 2019
- The Board appointed Engr. Yusuf Binji as managing director/chief executive officer on December 23, 2019
- Mr. Finn Arnoldsen appointed as a non-executive director, effective April 9, 2019
- Alhaji Shehu Abubakar and Senator Khairat Gwadabe appointed as independent non-executive directors, effective December 23, 2019
IV. Strategic Priorities
- Completion of Kalambaina Line-3 (3mmtpa) by H1, 2021. Project execution on schedule
- Drive further cost and revenue synergies from merger
- Build on gains recorded from current footholds in “new markets”
V. Financial Review
Revenue: Revenue increased by 47.5% (y/y) to N175.52 billion in 2019 (2018; N119.01 billion), underpinned by two (2) drivers namely:
- The merger led to capacity increase(s), from 2mmtpa in 2018 to 8mmtpa in 2019.
- Our differentiation strategy has translated to an increased appreciation of the ‘value’ imbued in the product offering. Hence, the growing market acceptance. Consequently, cement sales was up 47.5% to N175.52 billion.
Cost of Sales: Cost of sales was up by 57.6% (y/y) to N93.1 billion in 2019, resulting from increased production volumes. Moreover, energy cost rose 75.6% (y/y) from N20.67 billion to N36.29 billion from enhanced capacity, though energy per ton of cement produced increase by 14% (y/y); the result of slight increase in energy cost.
Operating expenses: Operating expenses recorded a 20.2% rise from N18.60 billion in 2018 to N22.36 billion in 2019, resulting from the following;
- Administrative expenses was down 16.0% to N10.52 billion (2018; N12.52 billion) due to a 45.6% decline in management and technical support expenses to N1.90 billion in 2019 (2018; N3.49 billion).
- Conversely, distribution and selling expenses increased by 94.8% (y/y) to N11.84 billion, supportive of higher sales volume from the route-to-new market strategy.
Net finance cost: Net finance cost was up 41.3% to N5.19 billion (2018; N3.67 billion) due to increased working capital requirement, which rose from N3.90 billion in 2018 to N21.36 billion in 2019, necessitated by capacity enhancement.
Profit before Tax and Profit after Tax: Profit before Tax (PBT) rose 69.1% (y/y) from N39.17 billion in 2018 to N66.23 billion; Profit after Tax (PAT) was down from N64.10 billion to N60.61 billion in 2019, due to deferred tax credit in 2018. However, approvals for the extension of pioneer status on Obu line-1 and Kalambaina line-2 were granted in February, 2020 for 2-years and 3-years respectively.
Cash and cash equivalent: Cash and cash equivalent balances rose from N2.71 billion in 2018 to N15.02 billion in 2019, arising from a 69.16% increase in net cash flow from operations to N26.48 billion (2018; N15.66 billion) along with a net borrowing of N16.8 billion.
About BUA Cement Plc
BUA Cement Plc (Bloomberg; BUACEMENT:NL) is Nigeria’s second-largest cement producer and the largest producer in its North-West, South-South and South-East regions; with a combined installed capacity of 8 mmtpa and with plans underway to increase existing capacity to 11 mmtpa, through the commissioning of a new 3 mmtpa plant by the first half of 2021 in Sokoto State, Nigeria. BUA Cement operates strategically from Okpella, Edo State and Kalambaina, Sokoto State.
BUA Cement Plc is a business combination between CCNN Plc (Sokoto Cement) and BUA Cement Manufacturing Company’s Obu Cement Company. Currently listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of N1.18 trillion ($3.3 billion), making it the third most capitalised company on the floor of the Exchange.
BUA Cement is committed to quality – a differentiating attribute, driven by its people, innovation, and technology; and positioned to solving Nigeria and Africa’s challenges while driving economic growth and development.