Lafarge Africa Plc 2016 Financial Summary

Business Description:

Lafarge Africa was incorporated in Nigeria on 26 February, 1959 and commenced business on 10 January 1961. The Company formerly Lafarge Africa Plc is in the business of manufacturing and selling of Cement and other cementitious products such as Ready-Mix concrete, Aggregate and Fly-Ash. On July 15, 2016, Lafarge S.A , France and Holcim Limited , Switzerland joined to create a new company, lafarge Holcim, Switzerland. The implication of the merger is that Lafarge Africa Plc is now a member of the world's number one building materials campnay. Lafarge Holcim is now the ultimate controlling party.

12 Months Report LAFARGEAFRICA PLC
	2016 N'000	2015 N'000	change	Year End
Revenue	219,714,112	267,234,239	-18%	December
Profit/Loss  before taxation	-22,818,718	29,286,847	-178%
Profit for the period	16,898,781	27,162,969	-38%
Issued Shares (Units)	5,480,734,000	4,554,902,000
Basic Earnings Per Shares (Kobo)	315.00	574.00	-45%
Last total dividend paid (Kobo)	105.00	300.00	-65%

Quarter on Quarter Performance

Revenue N'000                                                   PAT N'000

Q1: #52,420,896                                                  Q1: (#1,872,999)

Q2: #54,943,903                                                  Q2: (#28,373,244)

Q3: #53,679,083                                                  Q3: (#7,155,935)

Q4: #58,670,230                                                  Q4: #54,300,959

Lafarge Africa maintained an average of #54,928,528 000 in term of revenue in 2016, and even with the price increase in the 4th quarter of 2016 it could only increase revenue marginally above the 2016 average. It terms of PAT the company maintained an average of #4,222,695,250 throughout the period.

The 4th quarter performance masked the fact that the company was on a 3 quarters losing streak, which would have continued through the 4th quarter until manna of #39,717,499,000 fell on the company. 

A closer look at the Financial shows that the company had lost huge ground to Dangote Cement, its sales are now hard sell. This fact reflected in the fact that cost of sales was 81.49% of revenue in 2016 against 69.07% of revenue in 2017 given the fact that  revenue even declined by 18% year on year. In the same vein #24,749,539,000 being other operating expenses was compounded by the #22,702,255,00 foreign exchange loss, this was captured well in Q2 around the period Naira was devalued.

Further analysis shows that other operating income grew by 125.85%, Finance income by 88.46%, however this was not enough to a positive profit before tax since Finance cost increased by 44.87%, where interest on borrowed fund was #14,192,725,000. 

The Company tied down resources in its current asset. This is evident in the inventory level that jumped up by 95.78%  from #6,687,538,000 to #13,092,735,000. Also worthy of note is the current borrowing that  increased by 284.55% and Bank Overdraft that jumped up by 589.67 which shows the desperation of the company for hot money.

Lafarge need to do more in terms of revenue going forward to be able to compete favorable with current market leader Dangote cement. Worthy of note is the acquisitions by the Company in 2016, of Egypt Cement Holding (ECH), Additional Shares of Ashaka cement, Nigeria Cement Holding and Unicem. All this are expected to contribute to the top and bottom line of the company if they are well synergised.   

Corporate Action
Proposed Dividend:     105 kobo (2015: 300 kobo)
Proposed Bonus:         Nil (2015: 1 for 10)
Closure Date:              23^rd – 29^th June, 2017
AGM Date:                  7^th June, 2017
Payment Date:            7^th June, 2017

The dividend payment came as a surprise and the market hugged it. The stock closed today at #37.8k,  5% up from the previous close.

The Market had taken positive out of this result but how far it will go would be determined by the same Market in the coming days.