Like a submarine, an inconspicuous watercraft warship capable of launching ballistic missiles surreptitiously, BUA Cement is close to leapfrogging peer rivals.
This is because the cement maker has been magnifying earnings since it listed its shares on the stock exchange in 2019, a rare feat by any Nigerian corporate who operates in a challenging environment.
And a huge cash pile puts BUA Cement in an advantageous position-compared to competitors-to pay dividend, reduce debt, and fund future expansion plans that will help solidify its position in one of the fastest growing industries in Nigeria.
Read Also: BUA Cement Revenues Hit N209.4bn in FY 2020 Audited Results
For instance, net income hit a three year-high to touch down at N91.74 billion as at December 2021, which is 39.21 percent higher than 2020’s N65.90 billion.
Interestingly, a breakdown of the figures shows profit increased by 19.35 percent to N72.34 billion in 2020, from N60.61 billion in 2019, according to data gathered by MoneyCentral.
It is important to note that there has been bottom line steady growth in the last nine years, as revenue growth and cost control measures such as investment in alternative energy mix continues to add impetus to margins.
Revenue followed the same upward growth trajectory, buoyed by improvement in private and public sector demand with better government fiscal position added strength to the later.
The sturdy top line growth (sales) was supported by stronger volume growth and favorable pricing, and there are positive prognoses that the country’s huge infrastructure deficit will be a major driver of growth in the future.
Sales increased by 38.81 percent to N257.33 billion (the highest in 10 quarters) as at December 2021, and that compares with N186.90 billion recorded in 2020.
The percentage of profit BUA Cement produces from its operations is impressively stellar as operating margins moved to 40.71 percent in December 2021, from 39.39 percent in December 2o2o, 40.69 percent in 2019, according to MoneyCentral calculations.
Operating income hit a three year-high of N104.76 billion as at December 2021, which is 38.40 percent higher than 2020’s N75.69 billion.
The cement maker makes more profit after paying the cost of goods sold as gross profit margin increased to 46.67 percent in the period under review from 45.56 percent as at December 2020.
It obtains more net profit per dollar of revenue gained as net profit margin rose to 35.65 percent in December 2021 from 34.53 percent the previous year.
There has been marked reduction in energy costs and cost of production even amid inflationary pressures, currency volatility and decrepit infrastructure.
The improvement in cost and profit margin can be largely attributed to the company’s commencement of LNG usage in Sokoto.
The company said the LNG will replace some portion of the previously used imported coal for Kiln, a move that dovetails neatly with its carbon emission reduction aspirations. This will help reduce the company’s dependence on imported coal, and by extension, limits energy cost exposure to currency shocks.
Additionally, BUA Cement currently has c.48MW of electricity generators, running strictly on liquefied fuel (diesel).
The cement maker has a massive cash pile of N155.82 billion as at December 2021, and that is 27.33 percent higher than 2020’s N122.37 billion.
It is efficient in converting sales to cash from operation as cash margin increased to 60.55 percent in the period under review from 31.07 percent as at December 2020.
BUA Cement has used fixed assets to generate higher sales and better returns to shareholders as fixed asset turnover increased to 44.32 percent in the period under review as against 40.02 percent the previous year.
It is not surprising that BUA Cement is good in generating returns on the investment it received from its shareholders. Return on average equity (ROAE) moved to 12.30 percent in December 2021 from 9.70 percent the previous year.
The fastest growing cement company in Nigeria has also invested over $1 billion in the past four years to increase cement availability in the country, Abdul Samad Rabiu, CON, Chairman, BUA Cement at the Commissioning of the BUA Cement Sokoto Line 4 factory, by Nigerian President Muhammadu Buhari.
“In the past 6 years, we have completed 4 plants – two in Obu, Edo State and two in Sokoto (of which this sokoto line 4 is the fourth) with BUA’s total production capacity now standing at 11million tonnes with the completion of this plant,” Rabiu, said.
“Next year, we intend to complete the construction of two new plants of 3 million metric tonnes each for which construction is ongoing – one in Edo and the other here in Sokoto. We expect these plants to be completed next year which will bring our total production capacity to 17million metric tonnes. We look forward to Your Excellency coming to commission them by the first quarter of 2023.”