By InvestAdvocate
Lagos (INVESTADVOCATE)-Cement producer, Lafarge Africa Plc on Friday issued a ‘profit warning’ saying its half-year 2016 period is expected to be affected by the impact of the naira devaluation compared to the United States dollar resulting in an unrealised exchange loss.
According to the board of directors of Lafarge Africa, the current gas supply shortage is also expected to impact volumes for this quarter. “This announcement is based on the unaudited financial statements for the period ended June 30th 2016,” the company said in a statement with the Nigerian Stock Exchange (NSE).
The cement producer says the impact of the local currency devaluation is expected to be a N28 billion unrealised exchange loss arising from dollar borrowings, which at the first time of the devaluation consisted of $310 million shareholder loans and $85 million external loans.
“These loans relate to United Cement Company of Nigeria Limited (UNICEM) and were mainly set up prior to the acquisition by Lafarge Africa Plc of its original 35 percent stake in UNICEM, Lafarge said.
The company has since then increased its stake in UNICEM and held at the time of devaluation, 50 percent of UNICEM, which was fully consolidated.
Lafarge now holds 100 percent of UNICEM. “The N28 billion unrealised exchange loss will have no immediate impact on cash flow,” the company added.
Lafarge says it’s very positive about the future outlook for UNICEM, which is strategically located in Mfamosing, Calabar, in Cross River State and is a major cement plant in the South-South and South-East Region of Nigeria. “The plant has a cement capacity of 2.5mm tones and will double capacity with the commissioning of a 2.5mm tones line during the second half of 2016,” the company affirmed.
It recently concluded the issuance of a N60 billion bond, to refinance UNICEM’s naira debt. “The company is assessing refinancing part of the dollar debt,” it disclosed.
“The board is confident that the various initiatives put in place by management will provide an improved future performance of Lafarge Africa Plc,” the cement manufacturer added.
Shares of the company at the close of the session on the Nigerian bourse dropped 5.00 percent to N63.65 from 67.00 traded on Monday due to the three-day holidays; losing N3.35 per share.
