Nigeria: Lafarge Africa sees FY15 growth of 2.5%

Nigeria: Lafarge Africa sees FY15 growth of 2.5%
Published: 20 April 2016

Tagged Under: Nigeria Lafarge Africa 

Lafarge Africa recently released its FY15 financial results, which showed a 2.5 per cent YoY growth in revenue and a 20 per cent decline in profit after tax, PAT, over the same period in 2014, reports All Africa.

The company managed to grow its top-line amid the challenging market and economic headwinds it faced during the year, largely driven by the growth in its ready-mix sales and its southwest operations in Nigeria. Its ready-mix operations in Nigeria continued to show great strength with a 29 per cent increase in sales from the previous year which help bolster the top-line growth.

Similarly, Lafarge southwest operations in Nigeria also grew by six per cent driven by reduced production costs and improving operational efficiency, while the southeast operations had the highest EBITDA margin at 35 per cent versus 26 per cent in the preceeding year in the group, driven by efficiencies in its gas usage and kiln utilisation.

The 20 per cent decline in bottom-line resulted from one-off costs undertaken during the year for restructuring the company.

In its FY15 results, Lafarge's revenue growth to NGN267.2bn (US$1.34bn) from NGN260.8bn demonstrates the company's resilience despite the headwinds and the competitiveness in the market.

On the other hand, activities in Ashaka Cement, a subsidiary of Lafarge Africa, were not as positive as the company's operations were disrupted by the insurgency in the north where the subsidiary is domiciled, during the 1Q15. Hence, EBITDA reduced to NGN4bn on the back of a 20 per cent drop in volume.

In the 4Q15 Lafarge had to respond to the action of its major competitor, Dangote Cement, by cutting the prices of its cement products. Dangote Cement has the larger portion of the market. But Larfarge was effective in keeping direct costs stable as cost-to-sales ratio inched up by a modest one per cent amidst soaring inflationary pressure, albeit, cost of sales increased by  four per cent YoY to NGN184.7bn from the previous year's NGN177.8bn.

The increase in cost is largely due to a hike in production fixed cost, which increased by 65.8 per cent to NGN8.2bn as maintenance fixed costs and other fixed costs increased by 19 per cent and 73 per cent respectively.

Lafarge Africa's management has been unified after the group increased its shareholding in Ashaka Cement Plc from 58.6 per cent to 82.5 per cent during the year. Shareholding in Mfamosing operations was also increased from 35 per cent to 50 per cent with full management control and consolidation.