March 3, 2025/Cordros Report

BUA Cement Plc (BUACEMENT) published 2024 audited financials after market close on Friday (28 February), reporting a 6.4% y/y growth in EPS to NGN2.18 (2023FY: NGN2.05). The increase in earnings was primarily driven by a 90.5% y/y surge in revenue, reflecting record-high sales volumes and upward price adjustments. The board has proposed a final dividend of NGN2.05 per share, representing a dividend yield of 2.2% based on the closing price of NGN93.00 per share (28 February)

BUACEMENT’s revenue grew by 90.5% y/y to NGN876.47 billion in 2024FY (Q4-24: +136.1% y/y to NGN293.06 billion), driven by upward price adjustments (c.85.7% y/y) and higher sales volumes – aided by the commissioning of new production lines at the Obu and Sokoto plants.

Despite the robust revenue growth, gross margin declined by 707bps y/y to 37.1%, as the cost of sales (ex-depreciation) surged by 114.7% y/y, outpacing revenue growth. The cost increase was primarily driven by higher energy costs (+129.2% y/y | 51.3% of COGS), and operation & maintenance service charge (+146.3% y/y | 39.1% of COGS), reflecting inflationary pressures, elevated energy prices, and currency depreciation (-40.1%). However, in Q4-24, gross margin improved significantly by 1,151bps y/y to 43.3% (+745bps q/q), as revenue growth (+136.1%) outpaced cost increases (+96.2% y/y).

Meanwhile, EBITDA margin contracted by 596bps y/y to 31.0% in 2024FY (Q4-24: +1,232bps to 37.5%), further pressured by a 54.8% y/y increase in operating expenses (ex-depreciation), largely driven by the surge in distribution costs (+47.6% y/y | 56.1% of OPEX).

Net finance costs rose 73.9% y/y to NGN133.96 billion in 2024FY (Q4-24: +37.3% y/y to NGN59.15 billion), due to higher net FX losses (+31.7% y/y to NGN92.11 billion) and a 201.2% y/y rise in interest expenses to NGN60.04 billion. Meanwhile, interest income grew 41.2% y/y to NGN18.19 billion.

As a result, profit before tax (PBT) increased by 48.2% y/y to NGN99.63 billion (Q4-24: NGN37.88 billion vs. loss before tax of NGN18.52 billion in Q4-23), despite a higher tax expense of NGN25.72 billion (vs tax credit of NGN2.23 billion in 2023FY) and profit after tax (PAT) rose by 6.4% y/y to NGN73.91 billion (Q4-24: NGN24.94 billion vs loss after tax of NGN6.61 billion in Q4-23).

Comment: As anticipated, BUA Cement delivered strong revenue growth in 2024, driven by upward price adjustments and higher sales volumes. However, persistent cost pressures and currency depreciation constrained margins. Nonetheless, a standout Q4-24 performance fueled a 6.4% y/y increase in earnings, reversing 9M-24 earnings slump (-35.8% y/y). For 2025, we anticipate sustained revenue growth, and EBITDA margin expansion driven by increased demand and higher contributions from new plants. Our estimates are under review.