BUA Cement Plc closed the 2020 financial year with a strong final quarter that produced N53 billion in sales revenue and N17 billion in after-tax profit. This sustained the improved third-quarter earnings position and delivered the rebound we expected in the company’s earnings outlook for the full year.
We had posited that “overall, growths in sales revenue and profit are expected to remain good for the company to full year”. The company’s management accounts for the 4th quarter of last year show that the expectation was realised.
The cement producing company has maintained a galloping speed growth in turnover that pushed up further in 2020. It closed the year with sales revenue of N209 billion, which is an increase of 19 per cent over the 2019 closing revenue figure of N175 billion.
It regained momentum in sales revenue performance in the second half from a sluggish second quarter. Further gains came from an increase of 6 per cent in other income to over N8 billion.
The company realised an after-tax profit of N70 billion at the end of the year, which is an increase of 16 per cent over the N60 billion profit the company posted in the preceding year. Profit improvement in the year is an upturn from a decline of 5.4 per cent in 2019.
Input cost posed a challenge to the company’s management in the year. It grew ahead of sales revenue at 22.6 per cent to N114 billion compared to 19 per cent growth in turnover. It, therefore, made a slight incursion into sales revenue, claiming 54 per cent of it. Energy cost represents 41 per cent of the input cost.
Gross profit increased by 15.7 per cent to N95 billion at the end of the year. The slower growth margin in gross profit than sales revenue is due to the more rapid growth in input cost than sales during the year.
Favourable development in the year is a 10 per cent decline in administrative expenses to N9.5 billion at the end of December 2020. Selling and distribution cost grew by 7.6 per cent to N12.7 billion in the year.
Impairment writes back that helped to build operating profit in the preceding financial year to the tune of N3.7 billion, dropped by 68 per cent to N1.2 billion. Operating profit grew by 15.5 per cent to N82 .5 billion.
The company also retained the operating advantage of declining net finance expenses during the year. Net finance cost went down by 33.8 per cent to N3.4 billion at the end of the year. The company’s balance sheet borrowings of N66 billion was contracted during the year.
BUA Cement closed the 2020 full year trading with an after-tax profit of N70.5 billion. This is an increase of 16 per cent. The profit margin was good at 33.7 per cent at the end of the year, slightly down from 34.5 per cent at the end of 2019.
The company earned N2.08 per share at the end of December 2020, improving from N1.79 per share in the same period in 2019. It closed the 2019 operations with earnings per share of N1.79 and gave out N1.75 per share in cash dividend.
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