Lafarge Africa Plc (LAFARGE) released its Q2-23 unaudited financials over the weekend, reporting a standalone EPS growth of 3.2% y/y to NGN1.27 in Q2-23 (Q2-22: NGN1.23), bringing the H1-23 EPS to NGN2.20 (H1-22: NGN2.23). The muted growth in EPS was undermined by the increased tax expense (+121.1% y/y) in the review period.
In Q2-23, LAFARGE’s revenue grew by 10.3% y/y (H1-23: +5.9% y/y), supported by increases across its cement (+110.0% y/y | 96.8% of revenue), aggregates and concrete (+123.2% y/y | 3.1% of revenue) and mortar and power (+48.1% y/y | 0.1% of revenue) revenue lines. We believe this growth is attributable to higher volumes, possibly driven by increased demand from the real estate and construction sectors.
Gross margin weakened by 21bps y/y to 59.8%, owing to the faster growth in cost of sales (+16.4% y/y) relative to revenue (+10.3% y/y). The increase in the cost of sales can be attributed to higher fixed (+56.7% y/y) and variable (+11.5% y/y) production costs, reflecting the impact of heightened inflationary pressures in the period.
Further down, EBITDA advanced by 12.6% y/y, amid a slight moderation (-3bps y/y) in OPEX ex-depreciation. Consequently, the EBITDA margin improved marginally, rising by 7bps y/y to 34.6% in Q2-23.
Unlike its other industry peers, LAFARGE recorded a net finance income in Q2-23 (NGN2.74 billion vs net finance cost of NGN1.10 billion in Q2-22), primarily driven by the impact of a 22.0x surge in finance income (NGN3.15 billion vs Q2-22: NGN136.95 million) from higher interest income and foreign exchange gains as finance cost (-66.8% y/y) also moderated in Q2-23.
Overall, PBT advanced by 29.0% y/y to NGN32.79 billion in Q2-23 (Q2-22: NGN25.41 billion). Following a tax expense of NGN12.29 billion, profit after tax settled higher by 3.2% y/y, amounting to NGN20.50 billion, in Q2-23.
