H1 2022: BUA Cement’s balks higher interest cost to report 41% growth in earnings

BUA Cement Plc on July 25, 2022, released to the investing public its Q2 financial statement for 2022. The Industrial Goods Sector Company financial statements as released on NGX showed that profit after tax grew by 41.40 per cent to N61.36 billion compared to N43.396 billion in HY 2021; depicting profit before tax margin and net profit margin of 39.7 per cent and 32.5 per cent respectively broadly from growth in income tax and net finance cost.

The Company’s net finance cost grew by 245 per cent to – N2.845 billion from – N824.11 million in HY 2021. The growth is attributed to growth in interest expenses and exchange rate loss. While interest expenses grew by 246 per cent due to non-capitalisation of bond and loan interest on Sokoto line 4, exchange rate loss grew by 257 per cent on a wide margin between auction bid rates and I&E rates. Even in Q1 2022 compared to Q1 2021, the growth in net finance costs was substantial, a reflection of the exchange rate challenges experienced by the company.

As a result of the growth in the net finance cost, profit before tax and net margins in HY 2022 dipped by -0.68 per cent and -6.8 per cent respectively.

Notwithstanding, investors should be optimistic because at that rate, the company generated profits worth N0.325 of every Naira worth of sales. More so, the net profit margin, over the past four years, has been consistent, positive and above all 53 per cent on average.