BUA Cement Sees Sharp Profit Slumps In H1-2024
BUA Cement Plc saw a sharp decline in profitability in the first half of 2024, details from its unaudited financial statement published on the Nigerian Exchange platform has shown.
The cement company grew profit by 64.6% year on year to N363.94 billion in H1 2024 from N221.07 billion in the comparable period in 2023.
The cement company’s adjusted cost of sales increased by 131.8% year on year, reaching N244.20 billion, up from N105.36 billion in H1 2023, CSL Stockbrokers Limited said in a review note.
Analysts said the surge was primarily driven by significant growth in operation and maintenance service charges, energy costs, and materials. Its figures showed that maintenance services charge grew by 278.44% year on year, energy costs rose by 171.68% while material costs spiked by 140.75% amidst hot inflation in the country.
“We attribute these cost increases to elevated inflationary pressures and a sharp devaluation of the currency, both of which have substantially raised the company’s expenses”, CSL Stockbrokers said in the note.
Analysts explained that despite the significant rise in cost of sales, BUA Cement gross profit saw a slight increase of 3.5% to N119.74 billion in H1 2024.
However, the gross margin contracted markedly by 1,944 basis points year on year, falling to 32.9% in H1 2024 from 52.3% in the comparable period in 2023.
The company’s depreciation adjusted operation expenses was noted to increased significantly by 44.74% to N24.41 billion in H1 2024 from N16.86 billion 12 months earlier.
Analysts stated that surged in operating expenses was driven by increases in both administrative expenses adjusted for depreciation and selling and distribution expenses in the period.
The cement company’s other income item, which includes insurance claims, government grants, and sundry income, declined by 86.1% to N137 million in H1 2024 from N983 million.
Earnings before interest tax and depreciation (EBITDA) decreased by 4.4%, down to N95.47 billion in H1 2024 from N99.83 billion in H1 2023, analysts said in the review note. EBITDA margin also contracted significantly, decreasing by 1,893 basis points to 26.2% in H1 2024 from 45.2% in H1 2023.
BUA Cement operating profit declined by 5.7% year on year to N81.96 billion in H1 2024, down from N86.94 billion in the comparable period in 2023.
Analysis of the figures showed that net finance cost for BUA Cement decreased by 87.1% to N1.08 billion in H1 2024 from N8.38 billion in H1 2023. The decline was attributed to significant year on year rise in finance income to N9.80 billion in H1 2024 from N2.22 billion recorded in H1 2023.
Its finance costs climbed to N10.88 billion from the N10.59 billion recorded in H1 2023. The company FX losses increased significantly to N39.98 billion in H1 2024 compared with N2.14 billion recorded in H1 2023 due to devaluation of the Naira.
As a results of macroeconomic driven pressures, BUA profit before tax slumped by 47.5% year on year to N40.13 billion in H1 2024 from N76.43 billion in H1 2023.
At the end of the first half, its net income declined by 46.2% to N34.25 billion from N63.62 billion in H1 2023. Earnings per share declined by 46.3% to N1.01/s from N1.88/s in H1 2023.
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