Lafarge Plc released its 2012 Full year audited accounts with revenues increasing 40% to N87.9billion. Operating profit also doubled to N25.7billion when compared to 2011 when profits where N13.35billion. Operating profits margin at the end of the year was an impressive 29% up from the 21% posted a year earlier. Pre tax tax also more than doubled to N21.2billion whilst Profit after tax was N14.7billion resulting in a profit margin of 17%. Return on average equity at the end of the period was a 23% or 11% when adjusted for inflation.
The market off course has responded positively with share price rising sharply by 6.1% to N74.29 (from N70)at the close of business 27th March 2013 and that is after loosing N3.99 a day before. The result is an indication to most investors, as it is evidence that their expansion programs is now beginning to yield fruit as revenues have continued to increase despite total assets remaining unchanged and expenses also staying nearly flat. In fact the Return of Assets of 17% was ably boosted a higher asset turnover of about 58% compared to operating profit margin of about 25.7%. The company is presently enjoying a ride as their investment are now boosting profits.
Things are however not so rosy cash flow wise for WAPCO/Lafarge. They currently have a negative working capital of N8billion and still end of spending almost all of the N22billion generated in operating cash flows in paying down loans and dividends (N22billion) as well as another N5billion on Investment leaving them with a negative cash generated of N2.2billion. Nevertheless cash carried forward from the prior year still provides enough buffer helping them end the year with about N8.8billion in the bank. A dividend pay out of N3.6billion (N1.2 per share) for the over 3billion outstanding shares is fully covered.
One could opine it only amounts to a payout ratio of just 25% of profits which in itself is not bad. Last year dividend was 75kobo or 27% of profits and so achieving that same payout ratio would have cost them an additional N300million. On a flip side, this years dividend payment is N1.3billion higher than 2011 and their share price has seen a capital appreciation of almost 89%. So buckle up and cement your positions, the share price is about to take off even higher.