Lafarge Africa Plc. Earnings Note 2022FY - Burgeoning Cost Shear Bottom Line Growth
Burgeoning Cost Shear Bottom Line Growth
FX Scarcity, Elevated Prices Erode Topline Growth
Lafarge Africa Plc. witnessed significant increase in Revenue in 2022FY, as topline grew by 27.3% (YoY) to NGN373.25bn (vs NGN293.09bn in 2021FY). This is on the back of upward price review during the year. For clarity, Cement sales grew 27.0% YoY while sales of Ready mix and Other Products surged 41.7% YoY in 2022FY. On the 19th 0f August 2022, during a chat with the CFO, he stated management’s plan to maximize the company’s current production capacity rather than expand. This affirms our position on how the company was able to record Revenue increase despite any significant increase in production volume.
Bottom Line grew 5.2% (YoY) owing to the surge in Selling and Distribution Cost, Finance Cost, and Increased Tax Obligation. Headwinds such as FX illiquidity, energy disruptions and elevated yields in the fixed income market are the major factors for the tepid increase in bottom line compared to top line Growth.
We remain optimistic about Lafarge Africa Plc. We expect sustained growth in Revenue and a slowdown in cost pressures.
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.
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