March 17, 2025/InvestmentOne Report

In its audited result for FY:2024, BUA Cement plc posted a 90.74% YoY growth in revenue to NGN876.47bn, driven by higher pricing and improved volumes. Specifically, sales of bagged cement majorly in Nigeria (NGN875.84bn) following the commissioning of the two new 3 million metric tons lines at Obu (Obu line 3) and Sokoto (Sokoto line 5) aided the increase of product supply across the country.

Meanwhile revenue from outside Nigeria moderated to NGN631.64mn during the year from NGN3.92bn in 2023, owing to border closures after the change in government in Niger Republic which affected cement exportation to neighboring West African countries. Cost of sales (COS) more than doubled, rising by 108.74% YoY to NGN578.76bn due to the surge particularly in energy cost (+129.56% YoY to NGN282.48bn), as well as operation and maintenance service charge (+146.26% YoY to NGN215.28bn), mirroring the persistent inflationary pressures in 2024.  Furthermore, the cost pressures dragged gross profit margin down by 573bps to 34.26% relative to the previous year.

The outlook for BUA Cement is cautiously optimistic, given the prevailing macroeconomic uncertainties including the high-interest rate environment, elevated energy costs amid the current dynamics in the foreign exchange market which could weigh on earnings in the near term. Nonetheless, we believe that BUA Cements commitment to diversifying its energy mix, renegotiating operational and maintenance contracts should help mitigate cost pressures as effective cost management will be critical to sustaining margins. We therefore place an OVERWEIGHT rating on BUACEMENT.

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