Lafarge Plc released its FY 2021 results reporting a profit of N51 billion, representing 65% increase year on year.
The result is on the back of an inflationary year, where cement prices had experienced a consistent increase within the period thereby increasing the company’s sales.
A further look at the result shows that the company’s profit was driven by a significant rise in sales of the company’s segments, that is, Cement, aggregate and concrete, and other products.
All the company’s segments delivered a revenue of N293 billion in the full-year period compared to N231 billion in the same period of 2020. Revenue growth from the largest segment, cement sales, was at 26% year on year.
While revenue from sale of mortar was more than double at 231% Y-o-Y. Cement sales for the period generated N285 billion, aggregate and concrete sales raked in N7.63 billion, reflecting an improvement of 78% year on year. Revenue earned from sale of mortar was recorded as N338 million.
The company also made money from gains on the disposal of property plants and equipment, as well as, from below-market interest rate government loans, and sale of scraps.
Lafarge Plc full-year performance was on the back of inflationary pressures, as the industry witnessed price corrections by producers to cover for the increase in production costs and hedge against inflation.
Also, aggressive marketing could be a contributor to the driver of sales as advertising expenses surged by a whopping 33%, growing from N781 million a year earlier to N1.04.
As reported by Nairametrics, Lafarge, just like its peers, also increased its cement price from N2,400 to N3,600 as of April 2021 representing a 50% increase in the price of cement within four months and selling for around N4,000 towards the end of the year. As the company reviewed its product prices north-ward during the year, it explained that it was necessary in order to offset some of the inflationary pressures. More details on the driver of revenue will be revealed during the company’s earnings call event yet to be announced.
Although the company recorded growth in topline revenues, expense line items also rose with selling and distribution expenses up 21% YoY. While administrative expenses grew by 16% compared to the prior-year period.
Lafarge Plc has proposed a final dividend of N1.00 per share for FY 2021, taking the total dividend payment for the period to N2.00 kobo, after interim dividend payment of N1.00 kobo. the company last traded at N26.00 per share and has returned 8.56% from year-to-date. The stock is included in Nairametrics Stock Select Newsletter as a stock pick. Check here.