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BUA CEMENT PLC RELEASES AUDITED FINANCIAL RESULTS FOR 2019; REVENUE INCREASES BY 47.5% TO N 175.52 BILLION.

Lagos, Nigeria ~

BUA Cement, Nigeria’s second largest cement company, has recorded a 47.5% increase in revenues of N175.52billion in its just released Full year results for the 2019 Financial Year on the Nigerian Stock Exchange. The company’s Profits also increased by 69.1% from N39.17 billion in 2018 to N66.24 billion in 2019. BUA Cement Plc in its current form, is a business combination between CCNN Plc (Sokoto Cement) and BUA Cement Manufacturing Company’s Obu Cement Company which was completed in January 2020 and is currently listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of N1.18 trillion ($3.3 billion), making it the third most capitalised company on the floor of the Exchange.

Speaking on the result, Managing Director of BUA Cement, Yusuf Binji said, ” Through the adoption of a focused and disciplined approach, we continue to record strong revenue growth, even as we derive revenue and cost synergies from the merger across: pricing, scale and operational efficiencies; all supported by a sustainable business model and a value-oriented strategy, which have translated to growing market acceptance and is reflective in our margins. This is Despite the complexities and uncertainty that trailed the economic environment in 2019. We delivered on important strategic priorities, such as: the commissioning of our 3mmtpa Line-2 at our Obu Plant in March, 2019; the merger completion between CCNN Plc and Obu Cement Company Limited and commenced the listing process of BUA Cement Plc, the resultant entity of the merger on the floor of the Nigeria Stock Exchange (NSE), with the eventual delisting of CCNN Plc.

Going forward, our focus is to further harness the full benefits of the merger while making further in-roads to “new markets” both locally and outside Nigeria. We understand that the local and indeed the global economy would experience more uncertainties, yet we expect continued strong showing across the business, spurred-on by continued recovery acro ss the global economy”.

In his comments Acting CFO, Chike Ajaero said, “In 2019 we reported a decline in Profit after Tax (PAT) from N 64.07 billion in 2018 to N 60.61 billion which was due to income tax credit of N 26.76 billion in 2018 from reversal of previous tax provision made on Obu Line 1 and deferred tax credit on securing approval for tax exemptions under pioneer status incentive in 2019. Net deferred tax charge of N 5.15 billion was provided for in the current year and actual tax payable of N 475.29 million. Obu Line-1 and Kalambaina Line -2 are both on pioneer status approved in February 2020 for 2-years (extension) and 3-years respectively. The computation of Earnings per Share (EPS) for 2018 has been re-stated, to reflect a business combination under common control, as at January 2018”.

It should be noted that BUA Cement Plc is Nigeria’s second largest cement producer and the largest producer in its North-West, South-South and South-East regions; with a combined installed capacity of 8 mmtpa and with plans underway to increase existing capacity to 11 mmtpa, through the commissioning of a new 3 mmtpa plant by the first half of 2021 in Sokoto State, Nigeria. BUA Cement operates strategically from Okpella, Edo State and Kalambaina, Sokoto State and is committed to quality - a differentiating attribute, driven by its people, innovation and technology; and positioned to solving Nigeria and Africa’s challenges while driving economic growth and development.

I. Financial Highlights

Revenue increases by 47.5% from N 119.01 billion in 2018 to N 175.52 billion in 2019

EBITDA rises 47.2% from N 55.70 billion in 2018 to N 81.99 billion in 2019

EBITDA margin flat at 47.0%, arising from entry into ‘new markets’

Operating margin (EBIT) is up 4.71% points from 36.0% in 2018 to 40.7% in 2019

Profit before Tax (PBT), up 69.1% from N 39.17 billion in 2018 to N 66.24 billion in 2019

Profit after Tax (PAT), down 5.40% from N 64.07 billion in 2018 to N 60.61 billion in 2019, due to a tax credit of N 26.76 billion in 2018 from pioneer status incentive( 3 years) granted on Obu line-1 in 2019, reversing previous tax provision for the years

II. Operational Highlights 

Cement volume dispatched was up 53.2% from 2,940 kt in 2018 to 4,501 kt, as at 2019; arising from increased capacity

Merger between CCNN Plc and Obu Cement Company Limited, yielding revenue and cost synergies

Kalambaina plant, Sokoto State (Line 2) goes online for first full year in 2019; Obu Cement Plant, Edo State (Line 2) commissioned in March 2019

Return on Asset (ROA) up from 16.7% (2018) to 17.7% (2019)

Entry into new markets aided by value-oriented strategy

Metric

Dec-2019

Dec-2018

Δ%

Volume (kt)

4,501

2,940

53.1

Revenue (N’m)

175,518

119,012

47.5

EBITDA (N’m)

81,985

55,699

47.2

EBITDA margin

47.0%

47.0%

-

EBIT (N’m)

71,428

42,842

66.7

PBT

66,236

39,167

69.1

Equity multiplier (leverage) [1]

1.29x

1.58x

(18.4)

Table 1: Performance highlights

III. Key Developments

The appointment of Alhaji Abdulsamad Rabiu, CON as the Chairman of the Board, effective December 23, 2019

The Board appointed Engr. Yusuf Binji as managing director/chief executive officer on December 23, 2019

Mr. Finn Arnoldsen appointed as non-executive director, effective April 9, 2019

Alhaji Shehu Abubakar and Senator Khairat Gwadabe appointed as independent non-executive directors, effective December 23, 2019

IV. Strategic Priorities

Completion of Kalambaina Line-3 (3mmtpa) by H1, 2021. Project execution on schedule

Drive further cost and revenue synergies from merger

▪ Build on gains recorded from current footholds in “new markets”

V. Financial Review

Revenue

Revenue increased by 47.5% (y/y) to N 175.52 billion in 2019 (2018; N 119.01 billion), underpinned by two (2) drivers namely:

o The merger led to capacity increase(s), from 2mmtpa in 2018 to 8mmtpa in 2019.

o Our differentiation strategy has translated to an increased appreciation of the ‘value’ imbued in the product offering. Hence, the growing market acceptance. Consequently, cement sales was up 47.5% to N 175.52 billion.

Cost of Sales

Cost of sales was up by 57.6% (y/y) to N 93.1 billion in 2019, resulting from increased production volumes. Moreover, energy cost rose 75.6% (y/y) from N 20.67 billion to N 36.29 billion from enhanced capacity, though energy per ton of cement produced increase by 14% (y/y); the result of slight increase in energy cost.

Operating expenses

Operating expenses recorded a 20.2% rise from N 18.60 billion in 2018 to N 22.36 billion in 2019, resulting from the following;

o Administrative expenses was down 16.0% to N 10.52 billion (2018; N 12.52 billion) due to a 45.6% decline in management and technical support expenses to N 1.90 billion in 2019 (2018; N 3.49 billion).

o Conversely, distribution and selling expenses increased by 94.8% (y/y) to N 11.84 billion, supportive of higher sales volume from the route-to-new market strategy.

Net finance cost

Net finance cost was up 41.3% to N 5.19 billion (2018; N 3.67 billion) due to increased working capital requirement, which rose from N 3.90 billion in 2018 to N 21.36 billion in 2019, necessitated by capacity enhancement.

Profit before Tax and Profit after Tax

Profit before Tax (PBT) rose 69.1% (y/y) from N 39.17 billion in 2018 to N 66.23 billion; Profit after Tax (PAT) was down from N 64.10 billion to N 60.61 billion in 2019, due to deferred tax credit in 2018. However, approvals for the extension of pioneer status on Obu line-1 and Kalambaina line-2 were granted in February, 2020 for 2-years and 3-years respectively.

Cash and cash equivalent

Cash and cash equivalent balances rose from N 2.71 billion in 2018 to N 15.02 billion in 2019, arising from a 69.16% increase in net cash flow from operations to N 26.48 billion (2018; N 15.66 billion) along with a net borrowing of N 16.8 billion.

Notes to editors:

About BUA Cement Plc

BUA Cement Plc (Bloomberg; BUACEMENT:NL) is Nigeria’s second largest cement producer and the largest producer in its North-West, South-South and South-East regions; with a combined installed capacity of 8 mmtpa and with plans underway to increase existing capacity to 11 mmtpa, through the commissioning of a new 3 mmtpa plant by the first half of 2021 in Sokoto State, Nigeria. BUA Cement operates strategically from Okpella, Edo State and Kalambaina, Sokoto State.

BUA Cement Plc is a business combination between CCNN Plc (Sokoto Cement) and BUA Cement Manufacturing Company’s Obu Cement Company. Currently listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of N 1.18 trillion ($3.3 billion), making it the third most capitalised company on the floor of the Exchange.

BUA Cement is committed to quality - a differentiating attribute, driven by its people, innovation and technology; and positioned to solving Nigeria and Africa’s challenges while driving economic growth and development.

More information can be found at http://www.buacement.com/



[1] Total asset divided by total equity