February 27, 2023/CSL Research
BUA Cement’s FY 2022 numbers were strong, as Revenue grew 40.3% y/y to N360.99bn in FY 2022 from N257.33bn in the prior period (FY 2021). On a q/q basis, Revenue was up by 32.9% to N98.39bn in Q4 2022 from N74.04bn in Q3 2022. BUA Cement was the only player who managed to deliver volume growth in 9M 2022 (+14.9% y/y) amongst its peers. However, as of writing, the management is yet to provide details of the drivers of the company’s strong performance in FY 2022, but we believe it will be a mix of growth in both price and volume.
Cost of Sales (adjusted for depreciation) rose faster than Revenue, up 46.1% y/y (vs. Revenue growth of 40.3%) to N180.73bn in FY 2022 from N123.72bn in FY 2021. This increase could be attributed to the surge in energy cost, an increase in cost of materials, Inflationary pressures and the consistent FX depreciation which pressured raw material imports These prevailing factors have continued to hamper the performance of the industry players. Given the robust Revenue growth, Gross Profit grew by 34.9% y/y to N180.26bn in FY 2022 while Gross Margin also expanded to 49.9% in FY 2022.
Operating Expenses (adjusted for depreciation) was up 88.8% y/y to N31.12bn in FY 2022 from N16.59bn in FY 2021. The increase was driven by both Administrative Expenses adjusted for depreciation (up to N16.35bn from N10.58bn in 2021) and Selling & Distribution Expenses adjusted for depreciation (up to N14.77bn from N6.01bn in 2021). EBITDA remained resilient, up by 27% to N151.93bn in FY 2022. EBITDA was further boosted by a 6% y/y increase in Other Income to N2.79bn, however, EBITDA margin decreased marginally to 42.1% in FY 2022 from 46.5% in FY 2021. Despite an increase in Depreciation and Amortisation to N22.21bn, growth in Operating Profit accelerated, rising by 25% y/y to N126.93bn from N101.59bn in FY 2021.
BUA Cement recorded a steep increase in Net Finance Costs by 693.6% y/y to N8.61bn in FY 2022 from N1.09bn in the prior period (FY 2021). This is as a result of an increase in Interest Income (+213.0% y/y to 1.94bn in 2022) and a corresponding increasing in Interest expense which was up by 519% y/y to N10.55bn in FY 2022, Consequently, Pre-Tax profit grew significantly, up 17.4% y/y to N121.11bn in FY 2022 from N103.13bn in 2021.
Tax Expenses increased significantly to N19.14bn in FY 2022 from N12.79bn in FY 2021. As a result, Net Income climbed slower, growing by 12.1% y/y to N101.01bn in FY 2022 from N90.08bn in FY 2021. Earnings per share was up 12.1% y/y to N2.98/s for FY 2022 from N2.66/s in FY 2021.
Our estimates are under review. Current Price; N69.30/s.
| Buacement FY 2022 | ||||||
| Nm, except mentioned otherwise | FY’22 | FY’21 | y/y | Q4’22 | Q3’22 | q/q |
| Sales | 360,989 | 257,327 | 40.3% | 98,391 | 74,037 | 32.9% |
| Cost of Sales (Ex-Dep) | (180,726) | (123,718) | 46.1% | (50,232) | (40,810) | 23.1% |
| Gross Profit | 180,263 | 133,609 | 34.9% | 48,159 | 33,226 | 44.9% |
| Other Income | 2,786 | 2,628 | 6.0% | 2,514 | 72 | 3405.0% |
| Selling and Distribution Expenses (ex-dep) | (14,765) | (6,014) | 145.5% | (9,487) | (3,399) | 179.1% |
| Administrative Expenses (ex-dep) | (16,355) | (10,577) | 54.6% | (8,856) | (2,455) | 260.7% |
| EBITDA | 151,928 | 119,646 | 27.0% | 32,331 | 27,443 | 17.8% |
| Depreciation and Amortization | 22,209 | 15,427 | 44.0% | 6,500 | 5,935 | 9.5% |
| EBIT | 129,719 | 104,219 | 24.5% | 25,831 | 21,508 | 20.1% |
| Net Finance Income/ (Cost) | (8,612) | (1,085) | 693.6% | (1,112) | (6,879) | -83.8% |
| Profit before tax | 121,107 | 103,134 | 17.4% | 24,719 | 14,629 | 69.0% |
| Tax expense | (19,143) | (12,794) | 49.6% | (4,347) | (1,783) | 143.8% |
| Net Profit | 101,964 | 90,339 | 12.9% | 20,372 | 12,846 | 58.6% |
| Net income attributable to equity holders | 101,010 | 90,078 | 12.1% | 24,520 | 12,651 | 93.8% |
| Diluted EPS | 2.98 | 2.66 | 12.1% | 0.72 | 0.37 | 93.8% |
| Margins: | FY’22 | FY’21 | y/y | Q4’22 | Q3’22 | q/q |
| Gross margin | 49.9% | 51.9% | -2.0ppts | 48.9% | 44.9% | 4.1ppts |
| EBITDA Margin | 42.1% | 46.5% | -4.4ppts | 32.9% | 37.1% | -4.2ppts |
| PBT Margin | 33.5% | 40.1% | -6.5ppts | 25.1% | 19.8% | 5.4ppts |
| Net margin | 28.2% | 35.1% | -6.9ppts | 20.7% | 17.4% | 3.4ppts |
Source: Company data, CSL Research
