BUA Cement Consolidates Profit Growth

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The prospects are bright for shareholders of BUA Cement Plc as the company recorded a growth of 26 per cent in profit after tax for the first quarter ended March 31, 2020, writes Goddy Egene

Shareholders of BUA Cement Plc are savouring their investment in the company right now. Having recommended a dividend of N1.75 per share for the 2019 financial year, the company is heading towards delivering higher returns at the end of the current financial year, going by the first quarter performance ended March 31, 2020.

Despite the challenging operating environment, BUA Cement Plc posted increased revenue, which rose by 25.1 per cent to N53.969 billion in Q1 of 2020, compared with N43.134 billion recorded in the corresponding period of 2019.
Profit before tax (PBT) rose by 15.7 per cent from N17.394 billion to N20.129 billion, while profit after tax (PAT) increased 26.2 per cent from N15.682 billion to N19.789 billion in 2020.

According to the Managing Director/CEO of BUA Cement Plc, Yusuf Binji said the performance in the Q1 financial results amid the outbreak of the COVID-19 pandemic was yet another landmark of the company since its listing on the Nigeria Stock Exchange.
He said the performance was buoyed by an increase in production capacity from five million metric tonnes at the end of Q1’2019 to eight million metric tonnes currently, its strong product differentiation strategy which translates to an increasing appreciation of BUA Cement product offering and a growing distribution network across existing and new markets.

“The turn of the year witnessed the achievement of yet another milestone, with the completion of listing requirements of the NSE, emerging the third-most capitalised company on the exchange; with a market capitalisation of N1.2 trillion and the de-listing of the shares of Cement Company of Northern Nigeria Plc. Subsequently, BUA Cement was included as a constituent of the MSCI frontier market index in February.”

He said in response to the global pandemic, BUA Cement implemented its, “COVID business continuity programme and built into its corporate governance framework.
“This minimises disruptions along the value chain, prioritises the safety of workers and customers and assesses probable scenarios a prolonged lockdown would have on the business,” he said.

“Clearly, our strong-showing epitomises the effect of further growth in output but most importantly, a growing appreciation of the value and service offering we continue to afford customers in the market place: with sales revenue increasing by 25.1 per cent to N54 billion.

“We continue to anticipate changes to customer and market behaviour, aimed at further strengthening our value model, even as we continue our push into ‘new markets. As the COVID-19 virus makes landfall, we believe the current measures in place, should help minimise plausible downside risks; nevertheless, poised to take advantage of an upturn in market activities,” Binji added.
The impressive performance the BUA Cement is recording post-merger was expected going by the words of the Chairman of the company, Alhaji Abdul Samad Rabiu.

Rabiu had said the decision to merge was primarily motivated by the to ensure that the company is well positioned to grow and expand in the Nigerian cement industry.
“The merger with Obu Cement will create an entity with increased production capacity. We are of the opinion that the proposed merger will create a platform where significant synergies can be obtained for the benefit of our shareholders, employees, customers, distributors, suppliers and the broader economy,” he said.

Rabiu explained that the merger will increase the production capacity of the enlarged company to 8.0 million mtpa.
“It is anticipated that in addition to meeting the demand from customers in our core regions in the country, the enlarged company would be positioned to distribute its products in new geographical markets, creating the potential for additional shareholder value creation,” he said.

Rabiu noted that the merger would provide opportunities for significant cost savings and improved operational efficiencies by streamlining operations and optimising the use of combined resources.
On economies of scale, Rabiu said: “The merger will provide a platform where the enlarged company benefits from economies of scale in procurement, distribution and manufacturing of the products offered to our customers. We expect the benefits accruing from greater economies of scale to accrue to many stakeholders.”

According to him, CCNN shareholders will become shareholders of a larger and highly profitable entity, stressing that synergies created as a result of the merger would create additional value for shareholders.

“Besides, the enlarged company will create a platform for further investment that will have a positive impact on the communities where the operations of the companies are present as well as for the economy as a whole,” the foremost industrialist declared.

He said this consolidation would mark the culmination of the first phase of the BUA mid-term strategic plan for its cement businesses, which currently include four cement plants spread across Obu Cement Company and the CCNN.

“We intend to continue creating value for the benefit of shareholders of the consolidated company by maintaining their focus on outperforming the Nigerian cement industry across key indices through a laser-like commitment to excellent products and service delivery, operational efficiency as well as maintaining leadership position in their home markets,” Rabiu said.

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