April 29, 2024/CSL Research
In its recently released unaudited Q1 2024 results, BUA Cement reported a 51.5% y/y Revenue growth to N161.13bn in Q1 2024 from N106.35bn in the prior period (Q1 2023). Similarly, on a q/q basis, Revenue was up by 29.8% from N124.14bn in Q4 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 by 116.8% y/y to N110.97bn in Q1 2024 from N51.19bn in Q1 2023. We observed that most of the cost increases came from operation and maintenance service charges (281.53% y/y), Materials (156.19% y/y), and energy cost (+147.11% y/y). We believe that elevated inflationary pressures and the steep devaluation of the currency have raised the cost of the company significantly. Given the rise in Cost of Sales, Gross profit declined by 9.0% y/y to N50.17bn in Q1 2024 while Gross margin contracted by 2,073ppts y/y to 31.10% in Q1 2024 from the N51.90% recorded in Q1 2023.
BUA Cement Q1 2024
| Source: Company Data, CSL Research |
Operating Expenses (adjusted for depreciation) declined marginally by 2.38% y/y to N9.99bn in Q1 2024 from N10.23bn in Q1 2023. The decline was driven by a drop in Administrative Expenses adjusted for depreciation (down 6.30% y/y to N4.21bn) despite a marginal uptick witnessed in Selling & Distribution Expenses adjusted for depreciation (up 0.7% y/y to N5.78bn). Other Income which comprises of Insurance claims, Government grants, and Sundry income declined by 10.7% to N41m from N43m in Q1 2023. EBITDA decreased by 10.6% to N40.22bn in Q1 2024 from N44.98bn in Q1 2023. EBITDA margin also decreased by 1,733ppts to 25.00% in Q1 2024 from 42.3% in Q1 2023. Depreciation and Amortisation was up by 2.4% to N6.75bn in Q1 2024. The company’s Operating Profit declined by 12.8% y/y to N33.48bn from N38.39bn in Q1 2023.
Net Finance Cost for BUA Cement decreased by 58.3% to N1.82bn in Q1 2024 from N4.36bn in Q1 2023. The decline reflects a significant y/y rise in Finance Income to N3.06bn in Q1 2024 from N60.69m recorded in Q1 2023. Finance Cost also rose t0 N4.88bn from the N4.12bn recorded in Q1 2023. The company reported FX losses of N10.10bn in Q1 2024 because of the devaluation of the Naira. Consequently, Pre-Tax profit was down by 40% y/y to N21.29bn in Q1 2024 from N35.46bn in Q1 2023.
The company recorded a decline in Tax Expense of 61.7% to N3.32bn in Q1 2024, from N8.66bn in Q1 2023. Despite the decline in Tax Expense, Net Income declined by 33.0% to N17.97bn in Q1 2024 from N26.80bn in Q1 2023. Earnings per share declined 32.9% y/y to N0.53/s for Q1 2024 from N0.79/s in Q1 2023.
We have a target price of N77.52/s for BUA Cement with a SELL recommendation. Current Price; N143.20/s
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CSL Bua Cement Nigeria Earnings Quick Take Q1 2024.pdf
