BUA Cement Plc records 55.8% drop in profit to N16.28b, as Forex losses surges by 677.7%

WorldStage Newsonline– BUA Cement Plc has  released its second quarter 2024 (Q2-24) unaudited financials with 55.8% y/y decrease in profit after tax to N16.28 billion from N36.82 billion in Q2-23

Profit before tax also declined by 54.0% y/y to N18.84 billion from N40.96 billion in Q2-23.

BUA Cement’s Q2-24 revenue surged by 76.8% y/y to N202.81 billion (H1-24: +64.6% y/y to N363.94 billion thanks to improved sales volumes due to elevated demand and expanded production capacity following the commissioning of the Obu Line 3 and Sokoto Line 5 factories in January 2024, alongside higher cement prices during the period.

However, the company faced considerable cost pressures, reflected in the gross margin falling by 18.48 ppts y/y to 34.3% (H1-24: -19.44 ppts y/y to 32.9%), following a 146.0% y/y rise in the cost of sales (ex-depreciation).

The sharp rise in production costs was primarily due to higher raw material costs (+126.9% y/y | 35.4% of COGS) and energy costs (+194.2% y/y | 55.2% of COGS), driven by the broader inflationary environment, currency weakness and high diesel costs.

Thus, EBITDA margin declined by 20.58 ppts y/y to 27.2% in Q2-24 (H1-24: -18.93 ppts y/y to 26.2%), exacerbated by a 117.4% y/y increase in operating expenses (ex-depreciation). The OPEX outturn was fueled by higher staff costs (+71.3% y/y) and distribution costs (+49.8% y/y).

In Q2-24, BUA Cement reported a net finance income of N740.62 million in Q2-24 as against N4.02 billion net finance cost in Q2-23, supported by a 212.8% y/y increase in interest income and a 2.8% y/y decline in interest expenses.

In contrast, net foreign exchange losses surged by 677.7% y/y to N29.92 billion.

For H1-24, net finance costs declined by 87.1% y/y to N1.08 billion, while FX losses increased significantly to N39.98 billion (H1-23: N2.14 billion).

Meanwhile, earning per share (EPS) declined by 55.8% y/y to N0.48from N1.09 in  (Q2-23 primarily due to increased costs (+146.0% y/y) and substantial FX losses during the period. Similarly, H1-24 EPS fell by 46.2% y/y to N1.01 (H1-23: N1.88).