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Lafarge roars to four-fold in 2017 year-to-date operating margins

Leading Nigerian cement solutions provider, Lafarge Africa Plc weekend, reported a four-fold increase in operating margins in its financial results for the 9-month period ended September 2017.

Whereas operating EBITDA grew to ₦41.7 billion, net sales increased by 39% to ₦223.7b.

In his remarks, chief executive officer of the company, Michel Puchercos, averred that “Our Company continues to recover since we implemented the turnaround plan in September 2016 and have delivered a good performance even in a challenging market”.

“As of September 2017, the cement demand in Nigeria was significantly lower than prior year. Nevertheless, operating EBITDA for our Nigeria operations was up 4.0x at ₦41.7 billion and EBITDA margin stood at 30% thanks to stable pricing environment, steady industrial operations, fuel flexibility, execution of our commercial and logistics performance improvement plan. We shipped the first batch of cement to the Ghana market, which was well accepted.

Continuing, he recalled that the South African economy exited a recession in second quarter 2017, supported by secondary and tertiary sectors. Cement revenue was up 30% supported by stable pricing and the strengthening of the Rand against the Naira.

Puchercos noted “Although the gas shortages in the South West persisted, the plants ran efficiently on alternative energy sources. For the 9-month period, Ewekoro II utilized 65% of coal and petcoke combined, as gas supply was low at about 36%. Ewekoro I plant utilized 44% of alternative fuels, with gas supply in the region of 50% while Sagamu achieved about 25% alternative fuel substitution over the same period.

“Mfamosing plant in the South East region, utilized 99% gas in spite of a gas explosion in August. AshakaCem operations utilized 82% of coal over the same period.  The energy strategy of Lafarge Africa delivers against the objectives set and enables the development of local businesses.

According to him, “Overall cement demand in Nigeria is expected to close the year lower than the prior year, on account of the economic slowdown in the first half 2017. In South Africa, the environment gradually recovers from a recession but the challenges of cement overcapacity persist. In this context, Aggregate & Concrete operations will support business performance”.

Elated Lafarge Africa boss maintained that, “Our EBITDA margin expectations in Nigeria for 2017 remains strong at the mid-30s, as we strengthen the performance on the basis of a robust route to market, efficient logistics operation, and cost optimization programme through fuel flexibility, reduction of FX exposure and administrative cost optimization. Our South Africa operations would benefit from the aggregate & concrete business, as our cement operations stabilizes. Lafarge Africa remains committed to delivering strong performance and creates value for our Shareholders in 2017”.