October 30, 2024/CSL Research
In its recently released unaudited 9M 2024 results, Lafarge Africa reported a 65.9% y/y Revenue growth to N479.49bn in 9M 2024 from N289.08bn in the prior period (9M 2023). Similarly, on a q/q basis, Revenue was up by 16.6% to N183.92bn in Q3 2024 from N157.80bn recorded in Q2 2024. The broad-based growth in cement sales (up 66.66% to N466.27bn), and aggregate and concrete sales (up 45.29% to N12.89bn), drove the topline growth in 9M 2024. While no information has been provided on the Revenue breakdown, we attribute the company’s top-line growth to a mix of price increases and volume growth.
Maintenance fixed costs surged by 114.36% y/y, reaching N30.65 billion, while production variable costs rose by 81.86% y/y to N158.44 billion. Additionally, production fixed costs increased by 64.56% y/y to N32.43 billion. Consequently, the Cost of Sales (excluding depreciation) rose by 82.9% y/y to N221.51 billion in 9M 2024, up from N121.13 billion in 9M 2023. This increase reflects the impact of higher inflation and rising energy costs. Gross Profit grew by 53.6% y/y to N257.98 billion in 9M 2024. However, Gross Margin declined by 4.3 percentage points, falling to 53.80% from 58.10% in 9M 2023.
LAFARGE AFRICA 9M 2024
Source: Company data, CSL Research |
In 9M 2024, Operating Expenses (adjusted for depreciation) increased by 37.70% y/y to N108.32bn, up from N78.67bn in 9M 2023. This rise in OPEX was driven by a 36.3% increase in Selling & Distribution Expenses (adjusted for depreciation), which reached N82.90bn, and a 42.6% rise in Administrative Expenses (adjusted for depreciation), totaling N25.43bn.
Other Income, which includes gains from the disposal of property, plant, and equipment, government grants, sale of scraps, and other miscellaneous sources, surged by 319.8% to N2.27bn from N541m in 9M 2023. EBITDA grew significantly by 68.9% to N151.70bn in 9M 2024, up from N89.82bn in 9M 2023. However, the EBITDA margin decreased by 0.6ppts to 31.64% in 9M 2024 down from 31.07% in 9M 2023.
Despite a slight rise in Depreciation and Amortisation by 0.3% to N13.68bn, the company’s Operating Profit increased by 87.6% y/y to N130.08bn from N69.35bn in 9M 2023.
In 9M 2024, Lafarge reported a Net Finance Cost of N35.75bn, a sharp reversal from the Net Finance Income of N8.19 billion recorded in 9M 2023. This significant shift was driven by an increase in Finance Cost to N36.56bn, up from N11.57bn in the same period last year, alongside a decline in Finance Income to N811m from N3.37bn. The surge in Finance Cost was primarily due to a substantial rise in Net FX losses. In 9M 2024, the company recorded total FX losses of N21.45bn, most of which had been incurred by H1 2024, with minimal FX losses reported in Q3. Notably, FX losses in Q3 amounted to only N1.55 billion.
Pre-tax profit grew by 54.2% y/y to N94.33bn in 9M 2024, up from N61.16bn in 9M 2023. Tax expenses increased by 56.7%, rising to N34.25bn from N21.85bn over the same period. Consequently, Net Profit surged by 52.8% y/y to N60.08bn, compared to N39.31bn in 9M 2023. Earnings per share (EPS) also rose by 52.8% y/y, reaching N3.73 in 9M 2024, up from N2.44 in the prior year.
We have a target price of N47.81/s for Lafarge Africa with a Buy recommendation. Current Price; N37.00/s.
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Lafarge Africa 9M 2024 Earnings Quick Take.pdf
