Massive profits for BUA, Dangote, Lafarge Cement in H1 2020 Despite COVID other Challenges

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Amidst a challenging operating environment occasioned by the COVID-19 pandemic, some companies quoted on the Nigerian Stock Exchange (NSE) under the Industrial goods segment pooled a total of N184.26 billion in profit for the six months (H1) ended June 30, 2020.

The COVID-19 outbreak had become a global threat that led to the shutdown of economies around the world with analysts saying it would negatively impact consumer demand and businesses especially revenue generation from Nigerian companies.

However,, analysis of some of the results filed by some companies revealed that top tier companies under the industrial goods sector of the NSE, raked in a staggering profit amounting up to N184.26 billion.

The companies include Dangote Cement, BUA Cement and Lafarge Africa Plc.

In a filing sent to the investing community, BUA Cement announced an impressive 2020 half-year results declaring revenue of N101.3 billion and a Profit After Tax (PAT) of N34.82 billion representing an increase of 12.7 per cent and 13.74 per cent respectively from the corresponding period in 2019.

The company’s operating profits increased by 7 per cent, from N38.1 billion in H1’2019 to N40.8 billion in H1’2020. Equally, EBITDA margin improved in this quarter to 48.1 per cent – an improvement from 45.6 per cent in Q1, 2020 while Profit Before Tax (PBT) grew by N39.2 billion from N35.6 billion recorded in the same period of 2019.

In the same vein, Dangote Cement announced a PBT of N162.85 billion compared with N155.48 billion posted in 2019. The Group’s revenue went up to N476.85 billion as against N467.73 billion in the corresponding period of 2019 while its PAT rose to N126.14 billion compared to N119.24 billion in 2019.The period under review saw the company recording a maiden clinker shipment from Nigeria via the Apapa Export Terminal to Senegal in June even as it announced that plans were on track to ship more vessels of clinker to West and Central Africa in the second half of 2020.

Similarly, Lafarge Africa, generated N120.5 billion as revenue in H1 2020 in contrast to N117.9 billion reported in H1 2019. In the period also, the cost of sales increased marginally to N78.8 billion from N78.4 billion, while the gross profit jumped to N41.7 billion from N39.5 billion. Furthermore, the company’s PBT increased to N28.8 billion from N15.5 billion, while the PAT jumped to N23.32 billion from N9.01 billion, with the earnings per share at N1.45 versus 98 kobo of H1 2019.

Speaking on the results, Managing Director, BUA Cement, Yusuf Binji, said the impressive performance in 2020, despite the challenging operating environment occasioned by COVID-19 pandemic, was a pointer to the value and strength of the BUA Cement brand and product offerings as well as an indication of the excellent implementation of the company’s Business Continuity Plan which ensured the brand was able to withstand the impact of the pandemic in the period under review.

“Our resilient performance continues to showcase the value and strength in our product offering alongside our strategic business model. In a bid to further drive cost efficiencies and sustainability, we entered into strategic alliances for the supply of Liquefied Natural Gas (LNG) at the Kalambaina, Sokoto State and the management of our mining operations. Given these deliberate and strategic choices among other cost management efforts, we continue to combine development and innovation into our offerings and activities.”, Binji added.

On the impact of the pandemic on the business, Binji noted that the company remains quite optimistic about the future.

“This is because it affords us not only with the opportunity to further evolve our business model but also provides an opportunity for accelerated development. We will continue to push to new markets aided by a focused distribution strategy”, he said.

Also commenting on his firm’s performance, Group Managing Director, Dangote Cement, Michel Puchercos, said the company continued in its strong position despite the economic downturn facing the world economy due to COVID-19.

Puchercos noted that although April was greatly impacted by lockdowns and restrictions across the company’s operations, it experienced a strong quarter.

“We achieved a record high volume and EBITDA margin in Pan-Africa of 4.7Mt and 21.7 per cent respectively. Group EBITDA was up slightly despite the impact of COVID-19. I am particularly pleased to announce that Dangote Cement shipped its first clinker cargo to Senegal from our new cement terminal in Apapa, Lagos. It has been a long journey for Nigeria, from being one of the largest bulk importers of cement to being self-sufficient in cement production, and now an exporter of clinkers.

“We are on track to ensure West and Central Africa are cement and clinker independent, with Nigeria as the main supply hub. We want to continue developing regional and continental trade between the ECOWAS countries and beyond”, he added.

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