April 25, 2025/Cordros Report
BUA Cement Plc (BUACEMENT) released its Q1-25 unaudited financials yesterday (24 April), reporting a remarkable 351.4% y/y surge in EPS to NGN2.40 (Q1-24: NGN0.53). This strong earnings performance was primarily driven by an 80.5% y/y increase in revenue, a slower rise in cost of goods sold (COGS) ex-depreciation (+29.7% y/y), and a significant reduction in FX losses (NGN836.81 million vs. NGN10.06 billion in Q1-24).
BUACEMENT’s revenue surged by 80.5% y/y in Q1-25, which we attribute to higher sales volumes and an increase in cement prices. The rise in sales volumes was bolstered by contributions from new production lines at the Obu and Sokoto plants, driven by the uptick in construction and real estate activities during the period.
Gross margin improved significantly by 19.34ppts to 50.5%, as the growth in COGS ex-depreciation (+29.7% y/y) lagged behind revenue growth. This slower cost increase was influenced by exchange rate stability and the company’s cost reduction initiatives, including the introduction of solid fuel at the Obu Plant. The primary drivers of costs were energy (+48.8% y/y | 30.9% of COGS), manufacturing expenses (+2.4% y/y | 29.9% of COGS), and raw materials (+34.8% y/y | 14.0% of COGS).
EBITDA margin also saw a strong increase, rising by 20.20ppts to 45.1% in Q1-25, benefiting from the robust topline growth, despite a 62.7% y/y rise in operating expenses (ex-depreciation). The increase in operating expenses was primarily driven by a surge in distribution costs (+112.8% y/y | 63.1% of OPEX).
At the same time, net finance costs rose by 56.9% y/y to NGN18.63 billion, mainly due to a significant increase in interest expense on borrowings (+296.1% y/y), even as FX losses declined by 91.7% y/y to NGN836.81 million. The reduction in FX losses reflects the relative stability of the naira and a lower foreign currency debt exposure. Meanwhile, interest income decreased by 50.0% y/y to NGN1.53 billion.
Overall, profit before tax (PBT) surged by 368.6% y/y to NGN99.74 billion, while profit after tax (PAT) rose by 351.4% y/y to NGN81.12 billion after a tax expense of NGN18.62 billion.
Comment: BUACEMENT’s Q1-25 results significantly outperformed expectations, driven by strong revenue growth, impressive cost management, and a notable reduction in FX losses. The substantial improvement in EBITDA margin highlights the company’s operational efficiency and effective cost reduction measures on its key inputs – energy and production costs. We also note that the company’s earnings have already surpassed its 2024FY earnings, underscoring its robust performance early in the year. With solid demand in the industry, continued cost-saving initiatives, and a stable FX environment, we expect BUACEMENT’s momentum to persist through the remainder of 2025. Our estimates are under review.
