BUA Cement Plc has delivered resilient profitability in the third quarter of 2024 despite a continued challenging environment.
Despite rising input costs brought on by a weak currency and removal of subsidy on fuel, BUA Cement posted operating profit of N137.82 billion in September 2024, which is 15.20 percent higher than 2023’s N119.68 billion.
A favorable volume growth and favorable pricing environment helped propel sales as revenue spiked by 73.70 percent to N583.40 billion as at September 2024.
Since its debut listing on the Nigeria Stock Exchange to become the 3rd largest company by market capitalization, BUA Cement has remained profitable, rewarding its owners from distributable profit.
The cement maker demonstrated an enhanced capability to meet its short-term obligations, as reflected by the increase in both its current ratio and Quick ratio respectively.
Just like its peer rivals who operate in a challenging environment, BUA Cement is beset with rising cost of production.
For instance, cost of sales were up 115.90 percent to N402.59 billion in September 2024 from N186.43 billion.
The company spent N0.69 on input costs to produce each unit of product.
The bold reforms of President Bola Tinubu such as the removal of subsidy on fuel and unification of foreign exchange rate ballooned imported inflation and stoked unprecedented foreign exchange losses that has wiped out the shareholders of firms who are vulnerable.
Inflation in Nigeria slightly moved up to 32.70 percent in September 2024, far beyond the 21.4 percent target pursued by the Central Bank of Nigeria.
According to the International Monetary Fund, Nigeria’s inflation rate is projected to remain above 32 percent until the end of 2024.
The naira has lost about 70 percent of its value against the dollar and is the third worst performing currency in the world this year after the Lebanese Pound and the Ethiopian Birr.
BUA Cement aggressive expansion plans are propitious as analysts have a positive prognosis about future earnings growth as the government capital expenditure spend and private sector investment are expected to drive cement volume.
The company has successfully commissioned a 3.0MT Sokoto Line 5 plant and the 3.0MT Edo Line 3, which will increase total capacity to 17.0MT. The expansion is expected to drive sales volume in 2024 and beyond.
Thus, this is anticipated to increase the firm’s market share.
To further expand the company’s production capabilities the management has initiated plans for an additional cement production line in Adamawa State.
It is also in the final stages of commissioning a 70MW power plant in Edo state which is anticipated to reduce its dependency on external power sources.
