BUA Cement Nigeria Plc has proven to be resilient in the face of macroeconomic headwinds as it recorded the fastest profit expansion among the dominant players in the industry.
The company has been recording double-digit growth in earnings since it was listed on the Nigerian stock exchange in January 2020 to become one of the most capitalised firms in Nigeria.
BUA Cement sustained its excellent performance in 2022, delivering a profit after tax (PAT) expansion of 12.42% year on year (yoy), relatively better performance when compared to Lafarge Africa (+5.10% yoy) and DANGCEM (4.90 % yoy).
In short, BUA Cement continues to outpace its rivals with double-digit growth at the bottom line (profit), and it will overtake Dangote Cement as the largest firm by profit in the cement industry.
The cold commissioning of the Sokoto line 4 cement plant earlier in 2022 raised BUA Cement’s total installed capacity to 11.0MMTPA from 8.0MMTP, according to data from the company website.
The company’s management plans to diversify energy sources by integrating solar energy on a limited scale of up to 10MW in 2023.
Of course, cost management and sales expansion will underpin profit margins this year, and such improvement is expected to deliver higher returns to shareholders in the form of bumper dividend and share appreciation.
It is worth noting that the company and peer rivals benefit from a price hike, which is significantly responsible for the revenue uplift.
However, inflationary pressures and volatility in currency still remains a downside risk to operating cost.
Analysts at Chapel Hill Denham Limited in research note said BUA Cement’s volume is now expected to come in at 7.4mmt, translating to a capacity utilisation of 52.0% based on an installed capacity of 14.0mmt per annum.
The cement maker’s operating profit spiked by 24.46 percent to N129.71 billion in December 2022 from N104.22 billion as of December 2021.
It trades at a price-to-earnings multiple of 33.30 while its shares trade at N92.45 as of March 1, 2022.