Lafarge Africa Plc, a leading cement and building solutions provider, has now reported its 12 months 2015 results, with revenue up 2% against last year’s reaching N267 billion, in a challenging transitional market.
South West operations grew by 8% behind a number of initiatives such as the Key Distribution Scheme, a strong route to market and solid capacity utilization.
ReadyMix Nigeria continued its strong growth with a 29% increase over prior year. South African revenues grew by 7% in the last quarter. Ashaka operations are normalized, following the security challenges in the region which affected demand for cement in the North. Management remains very optimistic about the long term outlook for Ashaka, which is foreseen to return to strong growth in 2016.
Plant operations were mostly stable with gas utilization in the 90s in South West and Mfamosing operations. The South African cement operations returned to growth in Q4 with production up by 28% vs. last year, following the kiln overhauls in Q1 2015.
Group after tax profit declined by 20% versus last year, when taking into account the one-off restructuring costs and the unrealized exchange impact on the Mfamosing operations foreign currency borrowings from the parent group, LafargeHolcim, the world’s largest building materials company.
The one-off impact of the adjustment to the naira value of the foreign currency borrowing, due to the deterioration in the naira exchange rate, is to a large extent an accounting exercise as Lafarge Africa PLC is not foreseen to repay the shareholder loans in the foreseeable future, which makes up the majority of the foreign currency borrowing.
Excluding these one-off/none operational impacts, profit improved by 6% versus last year behind the strong underlying fundamentals of Lafarge Africa Plc’s operations. Cash flow from operations was robust at N57.9 billion.
The Nigerian operations of Lafarge Africa have been successfully unified and rationalized under one management team while being cognizant of the different stakeholders. Lafarge Africa has strengthened its foundation further by increasing its shareholding in Mfamosing operations from 35% to 50%, with full management control and consolidation.
Similarly, the shareholding in Ashakacem Plc. also increased from 58.61% to 82.46% in the year. The unified management team promises to drive efficiencies and ultimately generate synergy savings of N9 billion for the group by mid-2018.
Commenting on the results, the CEO, Lafarge Africa Plc., Mr. Peter Hoddinott said “our company continues to deliver good performance with significant upsides to come as new cement and power generation capacities come on stream and synergy benefits from the merger in Nigeria flow through. Our business integration process has been successful and as a Company we are optimistic to deliver improving performances in 2016 and beyond, improving value to our shareholders”.
Other Key Highlights for the Period
Consolidated revenues up 2% to N267 billion in a challenging market.
After Tax Profit from all operations declined by 20% vs LY to N27.0 billion, after stripping off one-off items and exchange revaluation impacts, after tax profit was up by 6% Operational Cash Flow generated stood by N57.9 billion for the 12 months period ended December 31, 2015.
The overall Nigerian cement market is foreseen to grow robustly in 2016 behind a strong Individual Home Building Segment. The Federal Government of Nigeria has also shown strong indications to support Infrastructure growth in the coming year. Lafarge Africa will be able to leverage its unique footprint in 2016 with Ashaka returning to growth, ReadyMix securing high volume contracts to support its 8 existing, and new plants to be commissioned as well as the new 2.5 million tons cement line due to be commissioned in Mfamosing in H2.
FUTURE OUTLOOK
The South African market will remain challenging, but Lafarge Africa will leverage the 2015 investments within the cement operations with a revamped sales team and route to market. In aggregates, the company will continue to benefit from its strong network delivering results with two new quarries, being opened in the Gauteng market and Ready-Mix growth. Overall, new strategies in penetrating retail, new geographies and the technical segment are expected to allow Lafarge Africa volumes to grow above a flat market in all three product lines.
Overall, the Lafarge Africa group will continue to seek innovative ways of improving product offerings in the Nigerian cement, concrete and aggregate market in 2016.
Lafarge Africa Plc., a leading sub-Saharan Africa building materials company is a subsidiary of LafargeHolcim, a world leader in building materials. Listed on the Nigerian Stock Exchange with a presence in Africa’s two largest economies, Nigeria and South Africa, Lafarge Africa is actively participating in the urbanization and economic growth of Africa.
Combining its operations in Nigeria- Ewekoro and Sagamu plants in Ogun State, Ashakacem in Gombe State, Mfamosing in Cross Rivers State, Atlas cement in Rivers State and Ready-Mix Nigeria with its varied operations in South Africa, Lafarge Africa has a current installed cement capacity of 12Mt, which is expected to grow to 18Mt. This is in addition to strong market leading positions in Aggregates, Ready mix concrete and Fly Ash.
Lafarge Africa leverages on its innovative expertise to provide valued added products and services solutions in the building and construction industry in Sub-Saharan Africa. Additional information is available on the website.
