FSDH Initial Reaction: BUA Cement FY21 results
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February 2, 2022/FSDH Research
Key Performance Highlights:
- BUA Cement continues to report robust YoY results, with revenue jumping 22.9% YoY, while profit after tax surged 26.8% YoY in FY21. The company also recorded a solid performance in 4Q21 as well, as the topline grew 33.2% YoY (12.5% QoQ) and the profit increased by 37.6% YoY (14.8% QoQ) to N91.7 billion in 4Q21. Given the inflationary pressures in the economy and the supply chain disruptions, the cost of sales charged 20.4% higher to N137.2 billion, resulting in a 108 bps YoY expansion in the gross margin to 46.7% in FY21.
- The operating expenses continue to rise as the selling and distribution expenses climbed 14.0% YoY to N8.0 billion in FY21, along with a 7.2% YoY rise in the administrative expenses to N8.7 billion in FY21. Consequently, Bua Cement recorded a 27.7% YoY rise in operating profit to N104.8 billion, a 155 bps YoY increase in operating margin to 40.7% in FY21. The company reported a net finance income of N528 million this year against net finance costs of N3.0 billion in FY20, owing to an increase in the unwinding of the provisions for decommissioning liabilities. The company recorded a higher income tax rate of 12.7% this year against 8.3% in FY20. Bua Cement reported a 26.8% YoY jump in the net profit to N91.7 billion in FY21. The earning per share came in at N2.71 compared to N2.14 in the prior year (N0.76/share in 4Q21).
- In January 2022, BUA Cement commissioned its new 3 million metric tonnes Sokoto Line 4 cement plant, significantly expanding its cement production. This should help boost the firms’ earnings considerably in the coming years, while the Sokoto plant continues to be the largest private-sector employer of labour in the North-Western part of Nigeria. Addressing the guests Abdul SamadRabiu, Chairman of BUA Cement, commented that BUA Cement company will continue to invest more in the cement industry until Nigeria is self-sufficient and cement is made available, accessible, and affordable for all Nigerians.
Market Reaction: The investor reaction to the blockbuster FY21 performance was mildly positive as the stock closed 1.14% higher at N70.75 versus a 0.91% gain for the All-Share Index on Monday (31/1).
Bua Cement Earnings Highlights FY21
Source: Company Financials, FSDH