Lafarge Africa Plc yesterday reported a profit after tax of N19.73 billion for the half year ended June 30, 2017 compared with a loss of N30.2 billion in the corresponding period of 2016. The results released to the Nigerian Stock Exchange (NSE), showed a revenue of N154.8 billion, showing an increase of 44 per cent from N107.3 billion in 2016. Cost of sale grew by 19 per cent from N92.2 billion to N110 billion, while sales and marketing expenses followed same uptrend to hit N2.12 billion, from N1.98 billion. Administrative expenses rose from N10.23 billion to N16.3 billion, just as net finance cost more than doubled to stand atN9.95 billion, compared with N9.95 billion in 2017.
However, the leading cement and other building materials company ended the H1 with a profit before tax (PBT) of N18.16 billion and PAT N19.73 billion, a major recovery from a loss of N30.24 billion.
Looking at the second quarter (Q2), analysts at FBN Quest said PBT grew to N8.7 billion compared with a pre-tax loss of N28 billion in Q2 2016.
â€œThe key drivers of the PBT growth were sales growth of 34 per cent and a 18.64 per cent expansion in gross margin to 32 per cent. These positives completely offset a 78 per cent rise in opex and a 138 per cent spike in net interest expense. Thanks to a tax credit of N5.9 billion and a positive result of N5.8 billion on the other comprehensive income (OCI) line, PAT accelerated to N20.3 billion.
Sequentially, sales and PBT were down by 10 per cent quarter/quarter (q/q) and eight per cent q/q respectively. However, PAT expanded by 44 per cent q/q thanks to the positive results on the tax and OCI lines. Compared to our forecasts, sales missed by 11 per cent. Although, PBT was in line with our N8.6 billion forecast, PAT beat by 260 per cent mainly due to the tax rebate of N5.9 billion and the positive result of N5.8 billion on the OCI line,â€ they said.
In terms of the H1 performance, said while sales were missed by around six per cent, the PBT was in line with their forecast.
â€œHowever, thanks to a positive result of N15.1 billion on the OCI line and a tax credit of N1.6 billion, PAT came in around 74 per cent higher than our forecast. We had expected significantly improved results in Q2/H1 2017, driven by base effects due in part to an unrealised foreign exchange loss of N27.5 billion that the company reported in Q2 2016. However, we note that the earnings were also underpinned by a marked expansion in gross margin driven by significantly higher pricing (+40 per cent ) and a noticeable reduction in energy costs (due to a higher gas-to-total fuel ratio) following improvements in gas supply.