BUA Cement held its earnings call for the 2024 financial year on March 13, 2025, sharing insights into its performance, cost pressures, and strategies for managing forex exposure.
The company delivered record-high volumes despite a slow start, driven by a previous price cut and naira depreciation.
However, rising costs and currency devaluation pressured margins, prompting management to implement cost optimization measures and forex risk management strategies to sustain profitability.
Speaking on the company’s performance, Managing Director/CEO Yusuf Binji explained:
“Our slow start was due to the customer backlog resulting from the October 1, 2023, price cut, which delayed our ability to adjust pricing amid the naira’s depreciation. In spite of this, our quality and support offerings continue to endear us to customers, enabling us to surpass our 2023 volume figures and attain a record high.”
The management team outlined key strategies to manage costs and mitigate forex exposure, ensuring long-term stability. Below are the key takeaways from the earnings call:
Capacity utilization & production volume
On capacity utilization, the MD/CEO, Engr. Yusuf Binji explained that utilization was slightly below 60%. At the beginning of 2024, BUA Cement had an installed capacity of 11 million metric tons per annum.
However, by the end of the year, capacity increased to 17 million metric tons per annum following the commissioning of two new production lines with a combined capacity of 6 million metric tons per annum.
Despite this expansion, he noted that the reported capacity utilization might not fully reflect the company’s actual operational performance in 2024, as the new lines are still in their ramp-up phase. He emphasized that 2025 will provide a more accurate picture of BUA Cement’s production capabilities.
“Capacity utilization was slightly below 60%. At the start of 2024, our installed capacity stood at 11 million metric tons per annum, but by the end of the year, it had increased to 17 million metric tons per annum after we commissioned two new lines with a combined capacity of 6 million metric tons.
“However, this may not give the actual or correct capacity for 2024, as the new lines are still ramping up. I think 2025 will give a better idea of what we are doing.”
On production volume, BUA Cement dispatched 8.138 million metric tons in 2024, compared to 6.712 million metric tons in 2023. The MD/CEO, Engr. Yusuf Binji emphasized that both pricing and volume growth played a significant role in driving the company’s turnover, which almost doubled in 2024 compared to 2023.
“When you look at the increase, pricing had a great impact, as well as volume growth. This combination resulted in a significant increase in our turnover, which almost doubled in 2024 compared to 2023. You know, we commissioned two new production lines, and that contributed to the increase. I believe overall market demand also grew by about 14% in 2024 compared to 2023, and all these factors accounted for the growth you have seen.”
Exports & target markets
On exports and target markets, the MD/CEO, Engr. Yusuf Binji explained that Nigeria remains the primary focus for BUA Cement, with exports only considered when there is surplus production.
“Our priority is to cover Nigeria first. If we have a surplus, then we can export outside Nigeria. Our traditional export market is from our Sokoto plant to Niger Republic, but due to the challenges, exports to that region now account for less than 1% of our total production.”
Regarding the decline in exports in 2024, he confirmed that it was driven by border closures following political changes in Niger Republic, which have significantly impacted BUA Cement’s ability to export to two neighboring West African countries.
“Yes, it is true that our exports declined. The closure of the border after the change in government in Niger Republic is still affecting our ability to export cement to two neighboring West African countries. Additionally, we are aware of the decision of these countries to distance themselves from the West African bloc.
Cost management and forex exposure strategies
On managing cost pressures and mitigating forex exposure, the Chief Financial Officer (CFO), Chikezie Ajaero, explained the company’s approach:
“If you look at our financials, you will see how we are managing our operating expenses. Our cost is heavy in energy and operations & maintenance (O&M). To address this, we are already diversifying our energy mix to focus on sources that are less volatile to foreign exchange fluctuations. Additionally, we are currently renegotiating our O&M contracts to ensure we have more local content than foreign components. With these two measures, we are confident in our ability to drive costs down significantly.”
On forex exposure management, the CFO highlighted the company’s deliberate approach to minimizing currency risks:
“We have taken concrete actions to reduce our forex exposure, as reflected in our publicly available financials. There has been a significant drop in our exposure to import finance activities, and our target is to further minimize our reliance on foreign-denominated facilities. Previously, we had more local financing arrangements, and we are working towards maintaining that balance.”
Regarding the IFC loan, he acknowledged its significance:
“The volume of our IFC loan stands at $300 million, which is quite substantial. To manage this, we have adopted a hedging strategy focused on cash flow alignment for interest repayments. As we accrue interest payments, we ensure that we provide the required cash flow at the same exchange rate used in the accrual. This eliminates the need to book additional forex gains or losses upon payment.”
The company’s approach to forex risk management revolves around two key strategies:
- Aligning cash flows with interest payment accrual rates to eliminate forex losses.
- Growing margins and profitability through increased production, ensuring resilience against exchange rate fluctuations.
Overall, while BUA Cement expanded its installed capacity to 17 million metric tons per annum, actual production and dispatch volume reached only 8.138 million metric tons in 2024, compared to 6.712 million metric tons in 2023. This suggests that capacity utilization remains below 60%, which means the company is not yet fully optimizing its expanded capacity.
The management acknowledged that the newly commissioned production lines are still in their ramp-up phase, and 2025 will provide a clearer picture of whether production can scale up to match the new capacity.
Investors should watch how quickly BUA Cement can increase its capacity utilization. if it can push beyond 60% and improve efficiency, it could significantly impact profitability and market share.
However, if capacity remains underutilized, it may raise concerns about demand, logistics, or operational bottlenecks.
