October 28, 2024/CSL Research

In its recently released unaudited 9M 2024 results, BUA Cement reported a 73.7% y/y increase in Revenue to N583.41bn from N335.86bn in the same period of 2023. On a quarterly basis, Revenue also grew by 8.2%, reaching N219.46bn in Q3 2024 compared to N202.81bn in Q2 2024. 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.

In 9M 2024, the Cost of Sales (adjusted for depreciation) increased by 123.8% y/y, reaching N384.98bn, up from N172.05bn in 9M 2023. This surge was primarily driven by significant growth in Operations, maintenance and technical fees (+219.77% y/y), energy costs (+138.83% y/y), and materials (+125.45% y/y). These cost increases can be attributed to heightened inflationary pressures and the continuous devaluation of the currency, which have markedly raised the company’s expenses.

Despite the significant rise in Cost of Sales, Gross Profit increased by 21.1% y/y to N198.42bn in H1 2024. However, the Gross Margin contracted significantly, decreasing by 1,476 basis points y/y to 34.0% in 9M 2024, down from 48.8% in the same period of 2023.

BUA Cement 9M 2024

Source: Company Data, CSL Research

Operating Expenses (adjusted for depreciation) rose by 40.74% y/y to N36.69bn in 9M 2024, compared to N26.07bn in 9M 2023. This increase was driven by higher Administrative Expenses (adjusted for depreciation), which surged 74.1% y/y to N15.85bn, and a 22.8% y/y rise in Selling & Distribution Expenses (adjusted for depreciation) to N20.84bn.

Other Income, comprising insurance claims, government grants, and miscellaneous income, dropped sharply by 80.5% y/y to N217m from N1.11bn in 9M 2023. EBITDA grew by 16.6% y/y, reaching N161.95bn in 9M 2024, up from N138.86bn in the prior period. Despite the improvement in EBITDA, the EBITDA margin contracted significantly by 1,358 basis points to 27.8% from 41.3% in 9M 2023. Despite a 25.8% y/y rise in Depreciation and Amortization, which reached N24.12bn, Operating Profit climbed to N137.83bn from N119.68bn in 9M 2023.

BUA Cement’s Net Finance Cost surged by 148.2% in the first nine months of 2024, rising to N17.37 billion from N7.00 billion in the same period of 2023. This increase reflects a growth in Finance Income, which climbed to N14.65 billion from N8.29 billion, alongside a sharp increase in Finance Costs, up to N32.03 billion from N15.29 billion last year. The company experienced substantial foreign exchange (FX) losses, nearly doubling to N57.44 billion in 9M 2024 from N26.94 billion in 9M 2023, largely due to continued Naira devaluation. As a result, Pre-Tax Profit fell by 28.0% year-on-year, reaching N61.76 billion compared to N85.75 billion in 9M 2023. Tax expenses also rose, totalling N12.79 billion, up from N9.68 billion last year. Consequently, Net Income declined by 35.6% to N48.97 billion in 9M 2024 from N76.06 billion in 9M 2023. Earnings per share (EPS) also decreased by 35.6% y/y, dropping to N1.45/s from N2.25/s.

We have a target price of N77.52/s for BUA Cement with a SELL recommendation. Current Price; N99.00/s

Kindly click on the below link to download the full report.

​​​BUA Cement 9M 2024 Quick Take.pdf​​​​​​​