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LAFARGE AFRICA PLC - Positive outlook sustained

Cost Optimization supports topline growth For the Q4 period, revenue came in 46% higher y/y at ₦73.8 billion culminating in a 27% y/y growth in FY’21 Revenue to ₦293 billion. The strong topline growth was supported by increased sales volumes (sales grew 6.1% higher y/y, driven by public and private sector demand as well as the releasing of 700,000 tonnes of previously constrained production capacity at the Ewekoro and Ashaka plants) and a 19.2% increase in average cement price. Although cost of sales for the FY’21 period rose by 24% to ₦150.5 billion due to volume increase, inflation and FX liquidity issues, gross margin printed at 48.6% y/y, 1.4ppts higher than the previous year. The margin growth was supported by higher prices and cost optimization strategies like distribution cost efficiency, backward integration and the use of alternative fuel for cement production.

Debottlenecking exercise to drive performance Looking ahead, we expect sustained growth momentum on the back of increased demand, volume growth and intensified cost saving techniques by management. We anticipate a slight decline in cement prices due to the continuous increase in production capacity by industry players, thereby driving demand in the private sector. For the public sector, demand increase would be driven by the government’s commitment to capital projects as the current administrator’s terms comes to an end.