By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE) -Cement manufacturers, Lafarge Africa Plc said on Friday profit after tax (PAT) declined 43 percent to N34.66 billion from N60.95 billion recorded in 2013.
Similarly, pretax profit fell 36 percent to N41.19 from N64.26 billion a year earlier.
Revenue dropped marginally to N205.84 billion from N206.07 billion reported in the same period of 2013, the cement producer said in a filing with the Nigerian Stock Exchange (NSE).
Analysts at Cordros said earnings were adversely impacted by other operating loss of N1.6 billion from a gain of N21.5 billion in 2013 and a net loss from associates amounting to N2.4 billion.
Investment One Research on its part highlighted that weaker operating expenses/sales ratio relative to financial year 2013 as well as the ‘other losses’ line item of N2.2 billion relative to N21.46 billion gain in 2013 led to the weak margin performance.
“Overall, the result is reflective of headwinds bedevilling the sector which includes high operating expenses due to power inefficiencies, inadequate gas supply and the elevated interest rate environment. As such, we are neutral in the near term as we expect these challenges to persist. We also highlight the cut in capital expenditure as well as the potential delay in government’s investment in infrastructure projects as focus remains on the political scenery,’ Investment One report added.
The report affirmed that Lafarge Africa remains one of Investment One’s preferred picks in the cement sector “and we note its significant capital investment plans (domestically) and increasing optimisation of its plants by the use of alternative fuel sources (biomass). These should support operating margins in the long term,” Investment One Research noted.
“We expect substantial benefits to accrue to Lafarge’s earnings from various ongoing capacity expansion projects. We believe the acquisition of controlling stakes in Ashaka and Unicem should support the stock’s performance as investor’s factor in the efficient production capacity. In addition, we see an upside to our earnings outlook on Lafarge, on the back of upcoming tax holidays as a result of its capacity expansion. This should be supportive of bottom line performance,” Investment One affirmed.
The report says the shares of Lafarge have outperformed the market with a year-to-date return of 10.56 percent growth compared to NSE all-share index (ASI) return of a negative 10.63 percent.
The firm proposed to pay a dividend of N3.60 per share to its shareholders compared with N3.30 paid in year 2013; indicating a 10 percent dividend growth.
Lafarge Africa in its corporate action said qualification date for the dividend is April 24; while closure date has been scheduled for April 27. The cement maker said its annual general meeting (AGM) comes up on May 22, 2015.
At the close of business today on the Nigerian bourse, share price of the company gained N4.45 kobo appreciating by five (5) percent.
