April 24, 2026/InvestmentOne Report
BUA Cement Plc delivered a strong performance in Q1:2026, with revenue expanding by 22.06% YoY to NGN354.98bn, driven largely by favourable pricing dynamics during the period. Cost of Sales (COS) remained well contained, rising marginally by 0.67% YoY to NGN152.97bn, reflecting effective cost management. Notably, energy costs declined by 9.90% YoY to NGN67.34bn, while operation and maintenance service charges fell significantly by 40.63% YoY to NGN31.41bn. However, material costs surged sharply by 981.35% YoY to NGN27.31bn, partially offsetting the broader cost moderation. As a result of the muted COS growth, gross profit increased by 45.51% YoY to NGN201.90bn, with gross margin expanding by 917bps to 56.88% (vs. 47.71% in Q1:2025).
The core business remained highly profitable, as operating profit rose by 50.80% YoY to NGN179.51bn, translating to an operating margin of 50.57%, up from 40.93% in the prior year. Operating expenses (OPEX) increased by 10.97% YoY to NGN22.71bn, driven by a 7.13% YoY rise in selling and distribution costs to NGN15.44bn, alongside a 20.12% YoY increase in administrative expenses to NGN7.27bn. Nonetheless, the impact was contained relative to topline growth. Additionally, other income, comprising sundry income, insurance income, and government grants amounted to NGN320.35mn, providing modest support to operating earnings.
Finance Income Outweighed Finance Cost: Bua Cement Plc recorded a net finance income of NGN161.75mn, compared to a net finance cost of NGN17.79bn incurred in the previous year. This was further supported by a net foreign exchange gain of NGN13.01bn, reflecting the relative appreciation of the Naira in the foreign exchange market during the period.
Profit Before Tax (PBT) jumped by 93.18% YoY to NGN192.68bn in Q1:2026, hinged on the strong revenue growth alongside the outstanding operating performance. After the deduction of NGN16.31bn as tax expense, the Profit After Tax (PAT) amounted to NGN176.38bn – marking a significant 117.42% YoY rise in PAT. Consequently, Earnings Per Share (EPS) rose to NGN5.21 kobo from NGN2.40 kobo in the preceding year.
Outlook: BUA Cement Plc is well positioned to sustain its earnings momentum in 2026, with earnings projected to reach NGN591.94bn supported by improved exchange rate stability and continued cost discipline. Margin resilience is expected to be underpinned by ongoing energy optimisation initiatives and operational efficiencies. However, topline growth remains largely price-driven, as evidenced in Q1:2026, raising concerns around the sustainability of revenue growth in the absence of meaningful volume expansion in the long run. At a PE ratio of 25.14x, we believe the stock is fully valued relative to peers, with limited upside from current levels. Consequently, we assign a target price of NGN271.84 per share and place a SELL rating on BUACEMENT.
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