BUA Cement Plc maintained a solid track record on earnings in the third quarter with growing sales revenue and moderated cost leading to an after-tax profit of nearly N66 billion at the end of the third quarter.
The strong half-year position of the cement producing company was maintained in the third quarter, as profit grew well ahead of turnover at 22 per cent compared to less than 13 per cent quarter-on-quarter.
The resulting gain in profit capacity in the quarter reflects a moderation of the company’s main cost line – input expenses as well as a major drop in net finance cost on a quarter-on-quarter basis.
Cost of sales grew by less than Nine per cent quarter-on-quarter compared to the 13 per cent growth in sales over the period. Net finance expenses dropped by 82 per cent quarter-on-quarter, leading to a gain in profit margin.
The company generated an after-tax profit of N22.5 billion for the third quarter, showing a gain in net profit margin from below 34 per cent in the same quarter last year to almost 36 per cent for the third quarter.
That led to a slight increase in profit margin at 35.3 per cent at the end of the third quarter from the half-year reading of 34.9 per cent.
The cement company closed the third quarter operations in September 2021 with sales revenue of about N187 billion, which is an increase of over 19 per cent year-on-year. This is a step back from the increase of 23 per cent in turnover at the half year.
The company remains on course in combining growing sales revenue with generally contained costs – which has been its earnings storey since last year. Keeping up revenue and keeping costs subdued represent the key strength of the company’s earnings performance so far in 2021.
The strong growth in other income at a half year was retained in the third quarter, achieving year-on-year growth of 53.5 per cent to N177 million at the end of September.
With a slowdown in the third quarter, input cost provided a cost-saving centre for the company over the review period. Cost of sales decelerated from 32 per cent at half-year to a 15.5 per cent increase year-on-year to close at N99.6 billion at the end of the third quarter.
The margin at which sales revenue grew ahead of the cost of sales increased in the third quarter from the modest record at the half year.
Selling and distribution expenses changed direction from a slight decline at half year to an increase of 6 per cent to N5.6 billion at the end of the third quarter.
Administrative expenses maintained the strong growth seen at half a year, rising by 53 per cent year-on-year to over N6 billion at the end of September 2021.
With the increases in selling and distribution and operating expenses, operating profit stepped back from 24 per cent increase at half-year to 21.5per cent improvement to N75.7 billion at the end of the third quarter.
The sharp drop in net finance expenses in the third quarter sped up the year-on-year drop as well. At about N1 billion at the end of the third quarter, net finance cost went down by 63.5 per cent year-on-year, accelerating downward from a 50 per cent drop at the half year.
The company raised short-term borrowings in the third quarter from below N17 billion at half a year to over N40 billion at the end of September. This is after cutting down borrowing over the preceding two quarters. The closing figure remains significantly down however from last year’s closing figure of N105.6 billion.
Total interest-bearing debts for the company, including a bond issue of N115.5 billion, have risen again to nearly N204 billion at the end of the third quarter from N184 billion at the half year. The figure remains a drop from the closing total debt figure of more than N269 billion at the end of 2020.
BUA Cement earned N1.95 per share at the end of the third quarter, improving from N1.58 per share in the same period last year.
