April 24, 2025/Cordros Report
Lafarge Africa Plc (WAPCO) released its unaudited Q1-25 financial results today (24 April), reporting a remarkable 836.7% y/y surge in EPS to NGN3.02 (Q1-24: NGN0.32), primarily driven by an 80.3% y/y increase in revenue. Notably, the board has proposed an interim dividend of NGN4.00 per share, translating to a 5.1% dividend yield based on the closing price of NGN79.20 as of 24 April.
WAPCO’s revenue surged by 80.3% y/y in Q1-25, underpinned by strong growth across all business segments—cement (+81.9% y/y | 97.7% of revenue), aggregates & concrete (+29.4% y/y | 2.2% of revenue), and mortar and power (+56.8% y/y | 0.1% of revenue). Management attributed the revenue growth to improved production capacity and strong market reception of new product offerings. In our view, this performance also reflects sustained demand from both public and private sector construction activity, further complemented by modest price adjustments.
However, despite robust revenue growth, gross margin rose only slightly by 6bps y/y to 52.6%, as the cost of sales (ex-depreciation) grew by 80.0% y/y. Notably, the increase in cost of sales was primarily driven by significant pressure from variable production costs (+89.3% y/y | 73.2% of COGS), which consist of fuel, power, raw materials, and consumables costs. The growth in these cost elements highlights the persistent impact of elevated energy prices and input cost pressures across the business.
Meanwhile, EBITDA margin expanded by 504bps y/y to 32.0% during the period, despite a 46.3% y/y increase in operating expenses (ex-depreciation). We note that the rise in OPEX was primarily driven by a 40.3% y/y increase in distribution costs (70.3% of total OPEX), reflecting diesel and energy expenses. Nonetheless, the OPEX-to-sales ratio improved by 483bps to 20.8% (Q1-24: 25.6%), indicating improved operational efficiency.
At the same time, WAPCO reported a net finance income of NGN1.45 billion in Q1-25 (vs a net finance cost of NGN21.53 billion in Q1-24), reflective of higher finance income (+18.2% y/y), and FX gain of NGN1.08 billion (vs FX loss of NGN21.80 billion in Q1-24). The company also recorded a 14.0% y/y increase in finance costs driven by a 425.3% y/y increase in interest expenses to NGN1.19 billion.
Finally, profit before tax (PBT) rose sharply by 739.5% y/y to NGN73.11 billion, while profit after tax (PAT) increased by 836.7% y/y to NGN48.64 billion, after accounting for a tax expense of NGN24.47 billion.
Comment: WAPCO has carried forward the momentum from Q4-24 into Q1-25, delivering a strong recovery from the FX-induced losses that weighed on Q1-24 performance. The NGN4.00 interim dividend came as an unexpected positive, and in our view, serves as compensation for the modest NGN1.20 dividend declared for 2024FY. We expect the company’s strong earnings trajectory to continue through 2025E, underpinned by robust demand from construction and real estate sectors, and growing traction from new product lines, including the Ground Calcium Carbonate (GCC) introduced in Q1-25. Our estimates are under review.
