BUA Cement has published 2019 audited financial report with overall profit before tax ( PBT) growing by 69.1% y/y with related margin improving by 480bps while the profit after tax (PAT) declined by 5.4% y/y following a NGN5.63 billion tax charge as against a deferred tax credit in the prior year totalling NGN24.9 billon.
The company recorded a 2019FY Earning per share (EPS) decline of 5.3% y/y to NGN1.79/s, mostly on input cost pressure as well as a tax charge incurred over 2019FY (vs. a deferred tax credit in the prior year).
On the 2019FY EPS of NGN1.79, the board has proposed a final dividend of NGN1.75/share, which translates to a yield of 5.6% on yesterday’s closing price (NGN31.20/share), and a payout ratio of 97.8%.
The group’s aggregate revenue rose by 47.5% y/y in 2019FY, following a sharp growth in volumes (+53.1% y/y), which offset the slight decrease in price (-3.7% y/y).
Meanwhile, the steep expansion in volume growth came amid higher installed capacity in the review period, given that OBU Cement completed its merger with CCNN last year, raising the total installed capacity to 8.0MMT – split across Sokoto Cement Lines 1 & 2 (2.0MMT) and OBU Lines 1 & 2 (6.0MMT).
On the reported 4,501MT, the capacity utilization rate translates to 56.3%.
Meanwhile, revenue breakdown provided showed that more than c.97% of the company’s sales were concentrated in Nigeria, while the balance was exported.
It was learnt that Niamey (Niger) is its largest export market. Disappointingly though, export sales declined sharply from a year ago by 77.4% y/y, following the closure of all land borders by the FGN at the twilight of August 2019.
The Group’s gross margin was weaker relative to the prior year as input costs rose by 57.6% y/y, well ahead of revenue growth, to set the stage for a 340bps deceleration in gross margin. This came amid the reported 37.5% y/y expansion in gross profit.
Expenses were higher by 20.2% y/y, driven by distribution costs (+94.8% y/y), which masked the decline in administrative costs (-16.0% y/y).
The expansion in OPEX was slower relative to topline growth, thereby resulting in a 290bps decline in OPEX to sales ratio when compared to the previous year. That, together with the sturdy other income growth (+91.9% y/y), led to a 47.2% y/y growth in EBITDA. BUA cement’s loan balance rose by a whopping 450.0% y/y, paving the way for a 42.6% y/y expansion in net finance cost.