Report

LAFARGE AFRICA PLC 9M'17 - Strong Nigerian operations masked by one-off costs

WAPCO released its 9M’17 results, showing mixed performances across the reporting period. On one hand, operational performance in Q3’17 came in quite strong particularly in the Nigerian operations, buoyed by strong prices and more efficient fuel mix. The South African operations however had a challenging third quarter, contributing negatively to earnings and dragging the Group’s performance lower than expected. In addition, series of One-off costs totaling ₦2.3 billion and FX losses of ₦9.9 billion further weighed on earnings. Amidst all these and persistent high finance charges, WAPCO recorded a loss after tax of ₦18.8 billion for Q3’17, cutting 9M’17 PAT to ₦0.9 billion – significantly below Vetiva and Consensus estimate.                                                  

We cut our Nigeria FY’17 volume expectation to 4.5 million MT from 4.8 million MT (Ytd: 3.4 million MT). Notwithstanding the weaker volume expectation, our FY’17 revenue remain unchanged at ₦297 billion – supported by the higher average price/tonne expectation. Overall, driven by the big cuts to our FY’17 forecasts, we cut our Pre-Rights Target Price to ₦69.60 (Previous: ₦79.26).                                                      

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Vetiva Capital Management
Vetiva Capital Management

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