Lafarge returns to profit with N19.7b in H1 2017

24 July 2017

 Lafarge Africa Plc has recorded a profit after tax of N19.7 billion for the first half of 2017, a complete turnaround from a loss after tax of N30.2 billion in the same period of 2016, a 35% growth.

Lafarge reported a loss after tax last year on account of the impact of the naira devaluation on a N28 billion unrealised exchange loss arising from US Dollars borrowings, which at the time of devaluation consisted of $310 million shareholders loans and $85 million external loans.

According to the company, the loans were related to United Cement Company of Nigeria Limited (Unicem) and were mainly set up prior to the acquisition by Lafarge Africa Plc of its original 35% stake in Unicem.

However, following dwindling inflow from operations at the time, Lafarge resorted to the capital market to raise capital through a 2 series bond issuance.

The first was to raise N60 billion, comprising N26,386,000,000 three-year bond at 14.25%, which is due in 2019, and a N33,614,000,000 five-year bond 14.75% due in 2021. According to the company, the proceeds of the bond have been used to part refinance the debt of its Unicem following the full acquisition.

The company in its H1 results also reported a profit before tax of N18.2 billion, from a loss before tax of N30.2 billion posted in the first half of 2016. Revenue trended northward to settle at N154.8 billion, representing an appreciation of 45% from N107 billion recorded HY 2016.

On the negative, operating expenses increased by 77.3% and was driven by a 21% spike in admin expenses which increased to N11.1 billion. Also, Net finance costs almost doubled to N10 billion from N5 billion recorded a year ago, on account of a 39% decline in finance income and a 90% increase in finance cost.

Total borrowings at the end of the period was N244.7 billion, from N127.6 billion at the end of 2016FY and N142.1 billion in Q1-17.

Analysts are optimistic of a positive reaction from the market in view of the company’s improved performance.

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