April 25, 2025/InvestmentOne Report

Lafarge Africa Plc s revenue rose by 80.26% YoY to NGN248.35bn in Q1:2025, driven by improved volume amid the introduction of Ground Calcium Carbonate (GCC) alongside price impact during the period. Segment-wise, cement sales climbed by 81.89% YoY to NGN242.67bn, while Readymix and other products ticked higher by 29.35% YoY to NGN5.40bn. Despite the 73.82% YoY rise in cost of sales (COS) to NGN125.37bn, gross margin expanded by 187bps to 49.52% from 47.65% in Q1:2024, buoyed by the continuous rollout of innovative products and the groups dedication to value creation. Production variables cost which consist of costs of fuel, power, raw materials and consumables surged to NGN86.23bn up by 89.34% YoY relative to Q1:2024, mirroring the prevalent inflationary environment amid high energy cost. Similarly, production fixed cost, which comprises personnel expenses, by-products costs and electrical energy expenses rose faster by 92.36% YoY to NGN21.54bn.

Lafarge Africa Plc remains well-positioned for continued growth, underpinned by its strategic expansion initiatives, continued product innovation, and enhanced operational efficiencies. The planned rollout of ECOPlanet cement in the Western region by Q2:2025 following its successful launch in the East in 2024 provides leg room for Lafarge s competitive position in the Nigerian cement market. Additionally, the company s deleveraging strategy, anticipated foreign exchange stability, and the prospect of monetary policy easing later in the year present supportive macroeconomic tailwinds. However, considering the current valuation and market dynamics, we place a NEUTRAL rating on WAPCO pending further catalysts to justify a more bullish outlook.

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