BUA Cement Plc (BUACEMENT) released its Q2-23 unaudited financials on Friday (28 July), reporting a standalone EPS of NGN1.09 in Q2-23 (Q2-22: NGN0.83), bringing the H1-23 EPS to NGN1.88 (H1-22: NGN1.81). The growth in EPS is attributable to the higher revenue (+25.3% y/y) recorded in the period. The board has announced a final dividend per share of NGN2.80 for 2022FY (vs 2021FY: NGN2.60), implying a dividend yield of 2.8% based on the last closing price of NGN98.95 (28 July).
BUACEMENT’s revenue increased by 25.3% y/y in Q2-23 (H1-23: 17.2% y/y), which we believe was driven by an increase in sales volume from a possible boost in investments in the real estate and construction sectors combined with higher pricing instituted within the year. On a q/q basis, we highlight that revenue advanced by 7.9% y/y.
Gross margin (+528bps) expanded to 27.7%, following the faster revenue growth (+25.3% y/y) relative to costs (+22.6% y/y). The increased cost of sales highlights the effects of higher raw material and energy costs amid sustained inflationary pressures.
The company’s operating expenses ex-depreciation increased by +7.0% y/y in Q2-23 due to higher distribution costs (c.50.0% of total OPEX) rising by 84.2% y/y in Q2-23. Nonetheless, the company’s EBIT (+380bps) and EBITDA (+280bps) margins advanced to 42.4% and 47.8%, respectively, in Q2-23, supported by moderation in administrative expenses ex-depreciation (-55.7% y/y to NGN1.10 billion).
Further down, net finance costs surged by 179.5% y/y, primarily due to a 93.2% y/y increase in finance costs. We note that the surge in finance costs emanated from higher interest payments (+57.1% y/y) in the period, compounded by exchange rate losses (+102.9% y/y).
Pre-tax profit grew by 26.0% y/y to NGN41.01 billion in Q2-23. Consequently, profit after tax increased by 30.6% y/y (NGN36.86 billion vs Q2-22: NGN28.22 billion) following a decline of 3.9% y/y in tax expense (NGN4.15 billion vs Q2-22: 4.32 billion).
