FSDH Initial Reaction: BUA Cement 2Q23 results 
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July 31, 2023/FSDH

Key Performance Highlights:

• BUA Cement reported robust numbers in 2Q23 as its revenue increased 25.3% YoY to N114.7 billion, while net profit vaulted 30.5% YoY to N36.8 billion in 2Q23. Moreover, the cost of sales grew relatively lower at 21.1% YoY to N58.9 billion in 2Q23 from N48.7 billion reported in 2Q22. Consequently, the gross profit stood at N55.7 billion in 2Q23, up 30.1% YoY, while the gross margin increased 179 bps YoY to 48.6% compared to 46.8% in 2Q22.
   
• The selling and distribution expenses soared 40.5% YoY to N6.8 billion in 2Q23, mainly due to higher marketing and distribution costs, while administrative expenses declined 49.6% YoY to N1.3 billion in 2Q23. The Company recorded a 66.3x jump in the other income to N937 million in 2Q23 (2Q22: N14 million) due to higher insurance claims and sundry income. Consequently, BUA Cement recorded a 37.3% YoY increase in operating profit to N48.5 billion in 2Q23, compared to N35.4 billion in 2Q22, and the Company’s operating margin increased by 372 bps YoY to 42.3% in 2Q23 compared to 38.6% in 2Q22.
   
• In 2Q23, the Company’s net finance cost spiralled to N7.9 billion against N2.8 million in 2Q22 due to the increased debt and significantly higher interest rates this quarter. It is worth noting that the Company’s total borrowings jumped to N232.4 billion in 2Q23 from a mere N104.6 billion in 1Q23. After the Company’s tax expenses marginally declined by 3.9% YoY to N4.1 billion, BUA Cement reported a 30.5% YoY surge in the net profit to N36.8 billion in 2Q23. The earnings per share came in at N1.09 in 2Q23 compared to N0.83 in the prior year period.
   
• Looking at sequential performance, the revenue increased 7.9% QoQ to N114.7 billion in 2Q23, with a 5.3% QoQ increase in the cost of sales to N59.0 billion, resulting in 10.7% QoQ surge in the gross profit to N54.7 billion in 2Q23 (1Q23: N50.4 billion). Selling and distribution expenses dropped 6.8% QoQ to N6.8 billion (1Q23: N7.3 billion), while administration expenses plunged 71.4% QoQ to N1.4 billion in 2Q23 (1Q23: N2.7 billion). The company’s tax expenses dropped 52.1% QoQ to N4.1 billion in 2Q23 against N8.6 billion in 1Q23. Consequently, the company reported a profit after taxes of N36.8 billion in 2Q23 compared to N26.8 billion in 4Q22, a 37.4% QoQ increase.
   
• On 10 March 2023, the Board of Directors proposed a final dividend of N2.80 per every share for the period ended on 31 December 2022, subject to appropriate withholding tax to shareholders whose names appear in the Register of Members as at the close of business on Tuesday, 11 August 2023. The dividend will be paid on 24 August 2023.

Market Reaction: The investor reaction to the solid 2Q23 results was muted as the BUA Cement stock remained unchanged at N98.95, versus a 0.65% fall for the All-Share Index (28/7).

Bua Cement Earnings Highlights 2Q23

Source: Company Financials, FSDH