March 3, 2022/FSDH Report
Key Performance Highlights:
- Lafarge Africa recorded a 27.1% YoY revenue growth in FY21, underperforming its closest competitor, Dangote Cement (+33.8% YoY). Lafarge Africa’s revenues grew 27.1% YoY to N293.1 billion in FY21, and the Cost of Sales rose 23.7% YoY to N150.5 billion, resulting in a gross profit of N142.6 billion, leading to a 31.0% increase YoY. The increase in the cost of sales was due to higher production and distribution variable costs. Variable costs increased to N88.5 billion from N60.8 billion in FY20, primarily due to increased costs associated with fuel, power and Raw materials and consumables. Production fixed costs have actually decreased to N12.4 billion from the previous year’s cost of N23.8 billion.
- The selling and marketing expenses increased 24.3% YoY to N57.0 billion. The majority of the increase came from a 227.5% YoY increase in distribution fixed costs and an 18.8% YoY increase in distribution variable costs. Administrative expenses increased 15.6% YoY in FY21. Other income was reported at N687 million, a 29.6% decline YoY caused by a decline of 62.1% in the gain on disposal of property, plant and equipment.
- The Company’s operating profit increased to N65.1 billion YoY from the FY20 profit of N45.7 billion. Consequently, the operating margin expanded 144 bps YoY to 48.6% in FY21. The finance income increased 48.0% YoY to N1.7 billion in FY21, out of which foreign exchange gain amounted to N1.2 billion. Finance costs fell 45.7% YoY to N5.3 billion in FY21, largely due to reduced Interest on borrowings to N3.7 billion in FY21 from N7.8 billion in FY20. This resulted in profit before tax growing by 65.7% YoY to N62.3 billion FY21. The Company’s net profit after tax increased 65.4% YoY to N51.0 billion in FY21, up from N30.8 billion in FY20. Likewise, Lafarge Africa’s earnings per share jumped 65.4% YoY to N3.17/share in FY21 from N1.91/share in FY20.
- On a year-on-year basis, gross profit increased to N78.7 billion in 4Q21 from N53.1 in 4Q20, leading to a 167 bps YoY growth in the gross margin. The effective tax rate increased to 45.6% in 4Q21 compared to 19.3% in 4Q20. The net profit also ballooned substantially to N9.2 billion in 4Q21 from N2.7 billion in 4Q20, resulting in a 727 bps YoY expansion in net margin to 12.5% in 4Q21.
- The board proposed a final dividend of N1.00 per share, payable on Thursday, 21st April 2022, to all shareholders registered in the Company’s books at the close of business on Friday, 1st April 2022.
Market Reaction: The investor reaction to the robust FY21 result was lukewarm as the stock closed 3.53% down at N26.00 versus a marginal 0.19% gain for the All-Share Index (1/3).
Lafarge Africa Earnings Highlights FY21
Source: Company Financials, FSDH
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