October 29, 2026/Cordros Report
HBM Nigeria Plc (HBMNG) released its Q3-26 unaudited results today, reporting a 15.3% y/y decline in standalone EPS to NGN3.95 (Q3-25: NGN4.66), bringing 9M-26 EPS to NGN16.89 (9M-25: NGN12.90). The weaker quarter reflected lower revenue (-5.2% y/y), a 12.5% y/y rise in cost of sales and lower net finance income (-33.1% y/y).
HBMNG revenue declined by 5.2% y/y in Q3-26 (9M-26: +18.9% y/y), following lower cement sales (-6.0% y/y | 96.0% of revenue). The decline was a result of planned annual maintenance at its existing plants, which management said was aimed at unlocking output restrictions. Meanwhile, aggregates & concrete (+18.1% y/y | 3.7% of revenue) and mortar & power (+78.0% y/y | 0.2% of revenue) both recorded increases. On a quarter-on-quarter basis, revenue fell by 27.3%.
Gross margin contracted by 731bps y/y to 53.5% in Q3-26 (9M-26: +141bps y/y to 59.9%), as cost of sales rose by 12.5% y/y against a decline in revenue. The increase in COGS was driven by higher maintenance fixed costs (+117.2% y/y | 24.8% of COGS) and production fixed costs (+91.6% y/y | 19.3% of COGS), alongside a 14.8% y/y rise in depreciation (7.6% of COGS). These more than offset a 20.6% y/y decline in production variable costs (48.3% of COGS), which comprise fuel, power, raw materials and consumables. The cost pressure largely reflects a spike in maintenance fixed costs, which more than doubled q/q to NGN28.79 billion (Q2-26: NGN11.65 billion), likely linked to scheduled plant maintenance during the quarter.
Similarly, EBITDA and EBIT margins declined by 260bps y/y and 356bps y/y to 41.0% and 36.7%, respectively (9M-26: +338bps y/y and +299bps y/y to 44.9% and 41.2%, respectively), highlighting the gross margin pressure. OPEX declined by 22.9% y/y in Q3-26 (9M-26: +6.2% y/y), driven mainly by lower distribution variable costs (-40.9% y/y), distribution fixed costs (-41.6% y/y) and advertising (-90.1% y/y), which more than offset higher administrative staff costs (+56.3% y/y) and office and general expenses (+61.9% y/y). Consequently, the OPEX-to-sales ratio improved to 16.3% in Q3-26 (Q3-25: 20.1%) and to 18.4% in 9M-26 (9M-25: 20.6%), which cushioned the pressure on margins.
Below the operating line, HBMNG reported net finance income of NGN4.96 billion in Q3-26, down 33.1% y/y from a net finance income of NGN7.42 billion in Q3-25. This reflected a 24.8% y/y decline in finance income to NGN7.39 billion and a swing in net FX from a gain of NGN193.36 million to a loss of NGN1.61 billion, which more than offset a 68.5% y/y decline in finance costs to NGN823.53 million. In 9M-26, net finance income rose by 113.3% y/y to NGN31.75 billion (9M-25: NGN14.88 billion), primarily reflecting a 102.2% y/y surge in finance income to NGN34.40 billion.
Ultimately, profit before tax declined by 14.8% y/y to NGN96.69 billion, while profit after tax declined by 15.3% y/y to NGN63.64 billion, after accounting for a tax expense of NGN33.05 billion (effective tax rate of 34.2%, Q3-25: 33.9%). For 9M-26, PBT and PAT grew by 32.3% y/y and 30.9% y/y to NGN414.43 billion and NGN271.99 billion, respectively.
Comment: HBMNG recorded a weaker Q3-26, as softer revenue and higher maintenance and fixed production costs weighed on margins after an exceptionally strong H1-26. We view the Q3 slowdown as temporary, as the maintenance should improve plant reliability and unlock effective capacity. Looking ahead, we expect revenue to recover in Q4-26 as output normalises following the maintenance work, with lower rainfall favouring construction activity, while the Sagamu and Ashaka expansions, due in Q1-27, should support volume growth thereafter. Our estimates are under review.
