FSDH Initial Reaction: BUA Cement 1Q24 results 
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April 30, 2024/FSDH Research

Key Performance Highlights:

• In 1Q24, BUA Cement posted revenue growth of 51.5% YoY to N161.1 billion, slightly outperforming the 50.0% YoY growth of its closest peer Lafarge Africa, whereas lagging behind Dangote Cement’s 101.0% YoY revenue growth in 1Q24. However, the Cost of Sales steeply rose 107.6% YoY to N116.2 billion during the quarter due to higher costs of materials, energy, and Operation and maintenance service charges, partly offset by favorable stock movement. Subsequently, Gross Profit declined 10.8% YoY to N44.9 billion, with margin contracting 1947 bps YoY to 27.9% in 1Q24 from 47.4% in 1Q23.
   
• The Selling and Distribution costs declined by 3.9% YoY to N7.0 billion, compared to N7.3 billion in 1Q23, mainly due to lower marketing expenses and other overheads and cement handling charges. Further, Administrative expenses declined 5.1% YoY to N4.5 billion from N4.8 billion in 1Q23, majorly due to the significant drop in debt issue expenses compared to last year, almost offset by higher Staff costs, security expenses, and repair and maintenance. Consequently, operating profit declined 12.8% YoY to N33.5 billion, compared to N38.4 billion in 1Q23. Additionally, the operating margin narrowed by 1532 bps YoY to N20.8% in 1Q24 Vs. 36.1% in 1Q23. The Company’s EBITDA also declined to N40.2 billion from N45.0 billion in 1Q23, a 10.6% YoY fall, while the EBITDA margin fell 1734 bps YoY to N24.9% during the quarter.
   
• Bua Cement’s Net Finance Cost for 1Q24 declined to N1.8 billion, from N4.3 billion in 1Q23, due to the Interest Income remarkably rising from N60.7 million in 1Q23 to N3.0 billion during 1Q24. Comparatively, Interest expense moderately rose to N4.9 billion from N4.4 billion in 1Q23. The Company reported a foreign exchange loss of N10.0 billion compared to a N1.7 billion gain in 1Q23. However, the tax charge decreased during the quarter by 61.7% YoY to N3.3 billion. Consequently, the Company reported a Profit for the year of N18.0 billion, down 33.0% YoY compared to N26.8 billion in 1Q23. Moreover, Earnings per share also reduced to N0.53 Vs. N0.79 in 1Q23.
   
• Looking at the sequential performance, the revenue increased 29.8% QoQ to N161.1 billion in 1Q24, with a 29.7% QoQ surge in Cost of Sales, resulting in a 30.2% QoQ growth in Gross Profit to N44.9 billion (4Q23: N34.5 billion). Selling and distribution expenses fell 14.2% QoQ to N7.0 billion (4Q23: N8.1 billion), while administration expenses reduced 91.3% QoQ to N4.5 billion in 1Q23 (4Q23: N2.4). The Company recorded tax expenses of N3.3 billion in 1Q24 against N11.9 billion credit in 4Q23. The Company reported a profit after taxes of N18.0 billion in 1Q24 compared to a N6.6 billion loss in 4Q23.

Market Reaction: The investor reaction to the 1Q24 results was muted as the BUA Cement stock remained unchanged at N143.20 versus a 0.35% gain for the All-Share Index (30/4).

Bua Cement Earnings Highlights 1Q24

Source: Company Financials, FSDH