CCNN posts N5.7b net profit

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Cement Company of Northern Nigeria (CCNN) Plc grew its net profit by 77 per cent to N5.7 billion in 2018.

In its first report since the merger with Kalambaina Cement Company, CCNN’ turnover rose by 62 per cent to N31.7 billion. Earnings before interest, taxes, depreciation and amortization ( EBITDA) rose by 86 per cent to N7.9 billion.

The top-line growth was due largely to increased domestic sales and exports. Overall, CCNN produced 0.76 million metric tonnes of cement and sold over 0.74 million metric tonnes, an increase of about 59 per cent. Sale of cement in Nigeria rose by 49 per cent to N28.9 billion while exports jumped from N0.2 billion in 2017 to N2.9 billion in 2018. Earnings before interest and taxes rose by 86 per cent to N7.9 billion profit before tax increased by 81 per cent to N7.6 billion.

While the merger was completed in fourth quarter of 2018, the management elected to report the performance of the merged entities as if the merger took place at the start of the year. Consequently, earnings per share shrunk by 83 per cent to 44 kobo as shares outstanding jumped over nine times to 13.1 billion units.

The board of directors of the company has recommended payment of a dividend per share of 40 kobo, representing some 92 per cent of the net earnings per share.

The management of the company stated that it plans to extend product distribution to the northeast and central regions of Nigeria, as it does not expect the northwest of the country to absorb the company’s current, larger 2.0 metric tonnes capacity.

There are however predictions that CCNN will record significant upside to its net income in 2019 and beyond upon approval of pioneer status by the Nigerian Investment Promotion Commission (NIPC) and a moderate chance of CCNN receiving approval on the new line.

Heidelberg Cement Group had in 2008 divested its majority equity stake in CCNN to Damnaz Cement Company Limited, a Nigerian company. In 2010, BUA International Limited acquired Damnaz Cement Company Limited and became indirectly the majority shareholder in CCNN and its technical partner. CCNN currently operates as a subsidiary of BUA International Limited.

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