March 1, 2024/CSL Research

In its recently released FY 2023 results, BUA Cement reported a 27.4% y/y growth in Revenue to N459.99bn in FY 2023 from N360.99bn in the prior period (FY 2022). Similarly, on a q/q basis, Revenue was up by 8.1% to N124.14bn in Q4 2023 from N114.77bn in Q3 2023. While no information has been provided on the Revenue breakdown, we attribute the company’s top line growth to increases in both price and volume.

Cost of Sales (adjusted for depreciation) was up 41.9 y/y to N257.12bn in FY 2023 from N181.16bn in FY 2022. We observed that the steep growth in Cost of Sales was driven by significant increases in operation and maintenance service charges (+88.23% y/y) and energy cost (+35.19% y/y). We believe the elevated inflationary pressures and the persistent devaluation of the currency continue to raise the cost of the company. Gross profit grew by 12.8% y/y to N202.88bn in FY 2023 while Gross margin which was impacted by elevated cost pressures contracted by 5.7ppts y/y to 44.10% in FY 2023

Operating Expenses (adjusted for depreciation) increased by 39.85% y/y to N35.22bn in FY 2023 from N25.18bn in FY 2022. The increase was driven by both Administrative Expenses adjusted for depreciation (up 17.9% y/y to N11.64bn) and Selling & Distribution Expenses (up 54% y/y to N23.58bn). Other Income which comprises of Insurance claims, Government grants, and Sundry income declined by 26% to N2.06bn. Despite the cost pressures, EBITDA increased by 7.8% to N169.72bn in FY 2023. However, EBITDA margin decreased by 6.7ppts to 36.90% in FY 2023 from 43.61% in FY 2022. Depreciation and Amortisation was up by 12.9% to N25.06bn. We saw a significant rise in FX losses in 2023 due to the continuous fall of the currency, with FX losses rising to N69.96bn in FY 2023 from N5.50bn in FY 2022. Given the rise in FX losses, Operating Profit declined by 42.2% y/y to N74.70bn from N129.72bn in FY 2022.

BUA Cement recorded an 18.1% decline in Net Finance Costs to N7.06bn in FY 2023 from N8.61bn in the prior period (FY 2022). The decline reflects a significant 563.53% y/y rise in its Finance Income, despite an 88.91% rise in Finance Cost. Pre-Tax profit was down by 44.1% y/y to N69.46bn in FY 2023 from N121.11bn in FY 2022.

The company recorded a Tax Credit of N1.82bn in FY 2023 compared with a Tax Expense of N20.10bn in FY 2022. Despite the Tax Credit, the FX losses dragged profitability significantly. Net Income declined by 31.2% to N69.46bn in FY 2023 from N101.01bn in FY 2022. Earnings per share declined by 31.2% y/y to N2.05/s for FY 2023 from N2.98/s in FY 2022.

Our estimates are under review. Current Price; N150/s

BUA Cement 9M 2023

Source: Company data, CSL Research

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