Lafarge Africa’s profit margins have widened even amid a challenging environment, suggesting that the prices charged by the cement maker are outpacing their increased costs for production and labor.
Profit after tax soared 95.8% YoY to N100.1 billion in December 2024 from N51.14 billion as at December 2023, surpassing the N100.0 billion milestone. Consequently, EPS settled at N6.22.
After tax profit as a percentage of sales for Lafarge Africa, a measure of profit margins, improved from the year ended December 2024 to 14.37 percent from 12.61 percent as at December 2023, according to MoneyCentral’s calculations.
Just like its peer rivals, the second largest cement producer in Nigeria implemented a price adjustment policy in response to rising inflation and input costs which yielded fruits as revenue spiked by 71.82 percent to N696.57 billion as at December 2024.
Lafarge Africa has extended its debottlenecking across all its plants, especially Ewekoro, Mfamosing, and Ashaka, as it seeks to unlock additional 2.0MMTPA in production volume.
In the long term, the cement maker plans to optimise its energy profile through greater investments in alternative energy as its cost to sales ratio increased to 50.23 percent in December 2024 from 49.05 percent the previous year.
Some analysts have wagered that the government’s infrastructure spending as detailed in the 2024 budget which is expected to accelerate demand for cement is a boon for Lafarge Africa, making its shares attractive to the patient investors.
The deleveraging of the balance-sheet a few years ago means the company has a healthy balance sheet and it has enough earnings to pay interest costs even amid rising borrowing costs brought on by an aggressive monetary policy by the central bank.
Interest coverage ratio stood at 4.76 in December 2024, though lower than 2023’s 4.78.
The interest coverage ratio measures how well a firm can pay the interest due on outstanding debt.
A lower ratio signals the company is burdened by debt expenses with less capital to spend. When a company’s interest coverage ratio is 1.5 or lower, it can only cover its obligations a maximum of one and one-half times.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!
