Nairametrics this week had an exclusive tweet chat with the Chief Financial Officer (CFO) of cement giant Lafarge Africa Bayet Bruno. Several issues were discussed including its earnings forecast for the second half of the year, a planned expansion of production capacity and the rationale behind a planned rights issue.
Here are excerpts from the chat.
Why marketing costs jumped in Q2 2018
So @bayet_bruno prospective investors would like to know what led to the huge spike in selling and marketing expenses from N1.6 billion in 2017 to N2.1 billion in 2018, as seen in your Q2 reports?
— Nairametrics (@Nairametrics) August 16, 2018
The spike in selling and marketing expenses is largely attributable to increased marketing campaign in South Africa. -BB
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
Foreign Exchange loans have been hedged
During the last foreign exchange crisis in 2016, the devaluation led to a spike in its finance costs. The company had to convert a foreign exchange loan from its parent Lafarge Holcim into equity. The loan was then paid off with proceeds of a N140 billion rights issue.
The company has taken steps to hedge all loans denominated in foreign currency.
Now on the money side, @bayet_bruno does Lafarge has any plan in place to prevent exposure to Forex fluctuations that has previously happened in recent years? #TweetChatWithLafarge #NairametricsTweetchat #LafargeAfrica
— Nairametrics (@Nairametrics) August 16, 2018
Well here’s the thing, all foreign currency loans are fully hedged against FX fluctuations. – BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
Where will the expansion take place ?
The CFO also disclosed that the expansion would take place in one of its plants located in the South West region of the country.
While we await the announcement, @bayet_bruno which of your plants will this expansion take place? #TweetChatWithLafarge #NairametricsTweetchat #LafargeAfrica
— Nairametrics (@Nairametrics) August 16, 2018
The plant expansion will take place in either of the South West plants.- BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
Lafarge has two plants located in Ewekoro and Sagamu, both in Ogun State.
Rights Issue in the works
Lafarge also intends to raise funds through a rights issue sometime this year, in a bid to deleverage its balance sheet.
Good question. The choice of Right Issue over bond is in line with the strategic plan to deleverage the Company. – BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
New Jobs
The company also disclosed that over 2000 new jobs will be created during the plant expansion. The company will also notify the public when recruitment for the 250 direct jobs being created will begin.
That’s a very thoughtful question. Approximately 250 direct jobs and over 2,500 indirect are expected to be created via the plant expansion. – BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
A link will definitely be shared with the general public. – BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
H2 2018 Earnings Guidance
Looking at the market and your results for Q2, @bayet_bruno what is your profit guidance for the rest of the year? #TweetChatWithLafarge #NairametricsTweetchat #LafargeAfrica
— Nairametrics (@Nairametrics) August 16, 2018
EBITDA expectation for Nigeria in H2 2018 is in the 40s (Nbn) while South Africa also expects a single digit positive EBITDA for full year, i.e. positive in H2. – BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
Lafarge Africa in the next 5 years
And finally, @bayet_bruno where do you see Lafarge in the next five years? #TweetChatWithLafarge #NairametricsTweetchat #LafargeAfrica
— Nairametrics (@Nairametrics) August 16, 2018
This is a very good question to end the session. We see a profitable Lafarge with increased production capacity in the next five years. – BB #NairametricsTweetchat
— Lafarge Africa Plc (@Lafarge_Africa) August 16, 2018
