BUA Cement published 2021FY audited financials at the close of business Tuesday, reporting PAT growth of 24.5% y/y to NGN90.08 billion while EPS settled at NGN2.66 (+24.5% y/y). The growth in EPS was due to the topline growth, stable margins in the face of elevated cost pressures and moderation in net finance cost. The board has proposed a final dividend of NGN2.60/s (an increase of 25.6% above NGN2.07/s in 2020FY), implying a dividend yield of 3.7% based on the closing price of NGN70.75 (March 29).
BUA Cement delivered double-digit revenue growth of 22.9% y/y in 2021FY, akin to the other industry players (DANGCEM: 38.0% y/y for Nigerian operations I LAFARGE: 27.1% y/y). Though management is yet to provide details behind the double-digit growth in revenue, we believe resilient private sector demand for cement combined with the strong upward adjustment in cement prices supported the topline performance. We highlight that the other industry players that have published earnings (DANGCEM; 18.1% y/y for Nigerian operations I LAFARGE; 18.8% y/y) raised prices significantly in 2021FY. At the 9M-21 conference call, management disclosed that the increase in price per tonne (+12.9% y/y) was due to a reduction in the discounts offered to key distributors.
EBITDA grew by 22.8% y/y in 2021FY, as revenue growth (+22.9% y/y) outstripped the growth in cost of sales ex-depreciation (+22.0% y/y) and OPEX ex-depreciation (+34.5% y/y). The surge in OPEX was due to sharp increases in admin expenses (+31.5% y/y) and selling and distribution expenses (+47.9% y/y). As a result, the trickle-down impact of the revenue growth on margins was limited as the EBITDA margin remained flattish at 46.5% in 2021FY (2020FY; 46.6%).
Earnings were also lifted by the steep moderation in net finance cost (-63.5% y/y), following the faster decline in finance cost (-55.5% y/y) relative to finance income (-27.8% y/y). We attribute the substantial decline in finance cost to the marked reduction in gross debt (-26.8% y/y to NGN197.05 billion in 2021FY vs NGN269.29 billion in 2020FY).
Overall, PBT grew by 30.4% y/y to NGN102.87 billion in 2021FY, with related PBT margin improving by 2.3ppts to 40.0%. Consequent to the jump in tax expense (+96.0% y/y to NGN12.79 billion in 2021FY), PAT grew slower by 24.5% y/y to NGN90.08 billion.
Industry Analysts would like that BUA Cement optimised its price/volume mix to keep margins stable despite energy cost pressures caused by the local currency devaluation amidst high inflationary pressures.
