Report
EUR 4.00 For Business Accounts Only

H1:2023 LAFARGE Africa Plc. Earnings Note | Performance Marked by Tepid Revenue Growth

H1:2023 financial statement for Lafarge Africa Plc. revealed a 5.95% YoY growth in revenue to NGN197.68bn. On the other hand, production cost of sales (adjusted for depreciation) rose marginally by 2.94% YoY to NGN81.02bn while total operating costs (ex-dep) advanced 9.76% YoY to NGN51.14bn. Despite the surge in finance income (+2,215.32% YoY to NGN4.44bn) and consequently, improvement in Profit Before Tax (PBT), Profit After Tax (PAT) declined by 5.16% YoY to NGN35.48bn. We associate the decline to higher effective tax rate (+109.50% YoY to NGN35.48bn) due to the expiration of the Pioneer Status Incentive (PSI).  Overall, net profit margin deteriorated to 17.95% YoY in H1:2023 (vs. 20.05% YoY in H1:2022).

Considering the company’s performance amid macroeconomic headwinds, our outlook for Lafarge Africa Plc remains positive. We based this on the expectation of an improved topline performance amid Management’s cost-saving strategies. We also recognize the company’s strong balance sheet position with free cash flow growing by 119% to NGN81.8bn in H1:2023. We maintain our 2023FY target price of NGN45.01.

Underlying
Lafarge Africa PLC

Provider
ARM Securities Limited
ARM Securities Limited

ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape. ​

Other Reports on these Companies
Other Reports from ARM Securities Limited

ResearchPool Subscriptions

Get the most out of your insights

Get in touch