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Tuesday, July 23, 2019 /10:00 AM / By NSE With Additional Notes From Lafarge Africa’s Press Release / Header Image Credit: Lafarge Africa Plc
Lafarge Africa Plc released its Q2 Unaudited Results
for the Period ended June 30, 2019.
Key Highlights
Revenue declined by 1.2% to N160.29bln from
N162.29bln in the previous year.
Profit Before Tax however spiked by 246.1% to N9.27bln
from N6.35bln loss recorded in the previous year.
Profit After Tax therefore grew by 330.9% to N9.01bln.
Net Assets grew by 69.3% to N227.78ln from N134.54bln
as at 3oth June, 2018.
Strong profitability momentum in Q2 2019
− Operating profit up 38,5% in Q2 vs LY
− Turnaround and cost reduction strategy delivering
with Q2 EBITDA (pre-IFRS 16) up 15,6%
− Strong earnings per share, improvement in Q2: net
income at N5,9 bn, benefiting from Operating Profit improvement and reduction
of net financial costs
− Closing of the sale of South Africa expected in 31st
July 2019
Michel Puchercos, CEO of Lafarge Africa stated: “Our
Strategy 2022 « building for growth » in Nigeria is delivering the expected
results with strong volume growth, considerable EBITDA improvement, robust net
income and operating cash flow development. We continue to deliver strong
margins as a result of our turnaround and cost reduction strategy in Q2 with
improvement in our commercial transformation, logistics performance, and
industrial and energy efficiencies. Our ambition is to continue the
acceleration of growth and earnings in 2019. South Africa continued the
turnaround plan with significant EBITDA and operating profit improvement in Q2
2019 compared to prior year.”
Good Progress on Strategy 2022 –
“BUILDING FOR GROWTH”
The global roll-out of the new Strategy 2022 –
“Building for Growth” – was successfully launched by Lafarge Africa with strong
progress made in all four drivers of the strategy, delivering results as
planned.
Growth – Switching gears to growth is the most fundamental principle of
Strategy 2022. Nigeria is strongly contributing to this growth and acceleration
of our improvement is expected in 2019 for Nigeria
Simplification &
Performance – Visible progress was made towards
ensuring best-in-class performance by improving and unifying our business
processes and logistics across the country. This has made our business simpler
and gives us access to data that will help improve our speed to market in 2019
and beyond. Our successful Go-live on SAP will be a strong enabler to our 2019
performance.
Financial Strength – The recent Rights Issue fully subscribed and the closing of the
divestment of the South African Operations expected in Q3 2019 will
significantly deleverage Lafarge Africa Plc by c.N239bn. This will strengthen
the Company’s balance sheet while significantly reducing financing costs.
Vision & People – Our leadership team is fully established and empowered to deliver
results. A simplified performance management system and incentive system is
being implemented. We are building local capabilities for improved efficiency
and performance in 2019.
Outlook 2019
· Softer cement growth
compared to 2018.
· Stable pricing
environment foreseen.
· Implementation of
route-to-market and energy initiatives to continue to deliver.
· Continuous focus on
cash cost reduction to drive operational performance.
· Divestment from South
African operations in Q3.
Nigeria
Q2 boasted strong results despite the slowdown in
market trends, closing flat YoY from a +6% growth in Q1 2019. Market was
affected by delays in the new cabinet nomination post February general
elections.
Cement volumes were up +3.3% supported by our new Route-to
Market whilst net sales grew by +1% only, impacted by downward pressure on
prices, notably after the Q1 end announced increase.
Recurring EBITDA closed with significant improvement
by +2.6%, ahead of Sales growth, supported by improved production, logistics
operations efficiencies and the implementation of our turnaround & cost
reduction strategy.
South Africa
The construction industry still remains subdued and
net sales down 2,1% in Q2 2019 despite price increase. The Lafarge South
African operations continue to yield positive results from its turnaround plan.
Other Financial Items
Net financial expenses for Q2 2019 was N4,8 billion
compared to N13,5 billion in Q2 2018. The decrease was mainly driven by the
repayment of all our short-term loans and overdraft from the proceeds of the
Rights issue which was successfully completed on March 8, 2019.
Free cash flow stood at N28,4 billion with significant
improvement over H1 2018 of N10 billion.
Net Profit After Tax for Quarter two was restored to
positive territory at N5,9 billion compared to -1,9 billion in previous year.
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