FSDH Initial Reaction: BUA Cement FY22 results 
Kindly click here to download the report.

February 28, 2023/FSDH Research

Key Performance Highlights:

• BUA Cement reported a robust set of numbers in FY22 as its revenue shot up by 40.3% YoY to N361.0 billion, while net profit grew 12.1% YoY to N101.0 billion in FY22. However, rising inflationary pressures in the economy resulted in relatively higher cost of sales growth at 45.1% YoY to N197.9 billion in FY22 from N136.4 billion reported in FY21. Consequently, the gross profit stood at N163.0 billion in FY22, up 34.8% YoY, while the gross margin contracted 183 bps YoY to 45.2%.
   
• The company recorded a 6.0% YoY increase in the other income to N2.8 billion in FY22 (FY21:N2.6 billion), driven by higher sundry income and insurance claims. On the other hand, the selling and distribution expenses soared 129.8% YoY to N18.8 billion in FY22, administrative expenses surged 55.0% YoY to N17.3 billion, and impairment write-back declined 94.9% YoY to N276 million in FY22. Although BUA Cement recorded a 24.5% YoY rise in operating profit to N129.7 billion in FY22, compared to N104.2 billion in FY21, the company’s operating margin declined 457 bps to 35.9% in FY22 compared to 40.5% in FY21.
   
• In FY22, the company’s net finance cost ballooned nearly 7x to N8.6 billion against N1.1 billion in FY21, owing to increased interest expense to N10.6 billion in FY22 compared to only N1.7 billion in FY21. The company reported an effective income tax rate of 15.9% this year against 12.4% in FY21, resulting in tax expenses of N19.1 billion, a 49.6% YoY rise. Ultimately, BUA Cement reported a 12.1% YoY growth in the net profit to N101.0 billion in FY22. The earnings per share came in at N2.98 in FY22 compared to N2.66 in the prior year.
   
• Looking at quarterly performance, BUA Cement reported a 39.7% YoY surge in revenue to N98.4 billion in 4Q22; however, the cost of sales increased 50.0% YoY, coming at N55.1 billion. As a result, the gross profit grew 28.5% YoY to N43.3 billion in 4Q22, while the gross margin declined by 385 bps to 44.0% in 4Q22 (4Q21: 47.8%). Furthermore, Selling and distribution expenses vaulted 139.7% YoY to N6.2 billion, and administration expenses climbed 81.5% YoY to N9.1 billion in 4Q22. Consequently, the company reported a profit after taxes of N27.0 billion in 4Q22, up 11.7% YoY, compared to N24.2 billion in 4Q21.

Market Reaction: The investor reaction to the solid FY22 results was muted as the BUA Cement stock remained unchanged at N99.45, versus a 0.69% gain for the All-Share Index (27/2).

BUA Cement Earnings Highlights FY22

Source: Company Financials, FSDH