February 28, 2025/Cordros Report
Lafarge Africa Plc (WAPCO) published their audited 2024FY financial results after close of business yesterday (27 February), reporting a 95.8% y/y increase in EPS to NGN6.22 (2023FY: NGN3.17). This growth was primarily driven by robust revenue growth of 71.8% y/y during the period. Meanwhile, the board has proposed a final dividend of NGN1.20 per share, implying a dividend yield of 1.6% based on the closing price of NGN75.00/s as of 27 February.
WAPCO’s revenue surged by 71.8% y/y in 2024FY (Q4-24: +86.2% y/y) supported by strong growth in the cement (+72.6% y/y; 97.2% of total revenue) and aggregates (+45.1% y/y; 2.6% of revenue) segments. Although management has yet to provide a detailed revenue breakdown, we attribute this strong performance to a c.45.0% y/y increase in cement prices, alongside higher sales volumes.
Despite strong revenue growth, gross margin contracted by 370bps y/y to 53.7% (Q4-24: -5bps to 55.6%) due to an 86.8% y/y increase in cost of sales (ex-depreciation). This was largely driven by a surge in energy costs (+109.8% y/y | 49.2% of COGS) and raw material costs (+59.5% y/y | 22.8% of COGS). The elevated cost profile reflects the impact of higher energy prices (+43.4% y/y), naira depreciation (-41.0% y/y), and inflationary pressures, which collectively weighed on gross margins.
Meanwhile, EBITDA margin edged up by 3bps y/y to 31.9% in 2024FY (Q4-24: +28bps y/y to 34.2%) despite a 51.6% y/y increase in operating expenses (ex-depreciation). We note that the rise in OPEX was primarily driven by a 54.9% y/y increase in distribution costs (70.8% of total OPEX), reflecting higher diesel, and freight expenses. Consequently, the OPEX-to-sales ratio declined by 300bps to 22.7% (2023: 25.7%), reflecting operational efficiency gains.
Further down, net finance costs rose sharply by 89.8% y/y in 2024FY (Q4-24: -58.6% y/y), driven by a 270.1% y/y increase in finance costs and a 15.3% y/y rise in net FX losses, while finance income declined 55.7% y/y. The surge in finance costs was primarily due to higher interest expenses on borrowings (+191.5% y/y) and a 290.3% y/y increase in bank charges, largely attributed to letters of credit fees. Additionally, FX losses amounted to NGN24.27 billion, reflecting the 41.0% depreciation of the naira, with the bulk of these losses (NGN19.91 billion) incurred in H2-24.
Overall, profit before tax (PBT) surged by 89.0% y/y to NGN152.52 billion, while profit after tax (PAT) rose by 95.8% y/y to NGN100.15 billion, following a tax expense of NGN57.37 billion.
Management call on Monday, 3 March 2025 at 3.00 pm Nigerian time. Click here to register.
Comment: We commend WAPCO’s strong 2024FY performance as the company effectively navigated cost and currency pressures that weighed on the industry. Through strategic debt repayment and reduced FX exposure, WAPCO outperformed expectations, demonstrating financial resilience and operational efficiency despite a challenging macroeconomic environment. Looking ahead to 2025, we expect the company to sustain this momentum, supported by steady demand across all product segments and mild price increases. Additionally, if the proposed Huaxin acquisition is completed within the year, potential synergies could further strengthen WAPCO’s growth trajectory. Our estimates are under review.
