Lafarge the dominant Cement Company released its 2012 Half Year results and true to its Q1 showing may have impressed yet again.

Revenue

Turnover rose 57% over the same period last year to N46b in the first half of this year. This is probably reflective of their huge expansion plans which reportedly cost N75b. Gross Profit Margin increased to 38% as cost of sales rose from N21.7b to N28.37b

Expenses

S,G&A increased by about N200m to N3.2b compared to the same period last year. Despite this increase the impact was just about 18% of Gross Profit, indicative of a highly efficient half year. This may also be a testament of their expansion programs which may not require any major addition to expenses despite adding to volumes in sales. Operating profit margin was thus 31.9% about 200% higher when compared to H1 last year.

Finance Cost

Finance Cost increased almost 4000% to N2.5b as the effect of long term loans obtained in 2010 start to materialize. The company has about N37b in debt mostly made up of loans from CBN intervention fund and another from a 3year bond issuance with coupon of under 12%. At 17.5% of Operational Profit, interest cost is manageable and sustainable. However, an increase down the line is foreseeable considering the economic situation. Same time last year it was just 1.4% before rising to 14.6% in the full year of 2011.

Profit After Tax

Profit after tax grew 175% compared to the same period last year to N8.8b. Profit as a percentage of sales was about 19% higher than the 11% obtained same period last year. Return on Equity also increased to 14.1% a level where the company should be at this time of the year.

The company has been fairly stable in terms of share price hovering at between N39 to N45 all year round. It might be pricey at N45 but at a P.E of around N10x its surely worth it.

 

 

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