Lafarge Africa Plc just released its financial results for the year ending December 31, 2024, and they’re looking pretty impressive with a pre-tax profit of N152.2 billion. That’s a massive increase of 93.27% from the N78.7 billion they earned in 2023.
This strong performance comes despite rising production costs, higher taxes, and the overall economic uncertainty in Nigeria.
Their revenue surged by 71.83%, reaching N696.7 billion, up from N405.5 billion the previous year. Cement sales accounted for 97% of their total revenue, highlighting Lafarge’s dominance in Nigeria’s construction sector. Additionally, their total assets grew by 45.37% to N990.5 billion, reflecting their financial strength.
This report comes at a time when the Nigerian government is urging cement manufacturers to lower prices to N7,000 per bag, thanks to better foreign exchange rates. However, companies like Lafarge are pushing back, citing a challenging business environment, rising production costs, and heavy taxes as reasons for maintaining higher prices.
The Nigerian cement industry plays a crucial role in driving economic growth and infrastructure development, significantly impacting GDP and job creation. Still, the sector is grappling with rising input costs, energy bills, and various taxes imposed by the government.
The government’s recent call for cement manufacturers to lower prices to N7,000 per bag has sparked some debate. While officials believe that lower prices would help ease the financial strain on citizens and boost construction, cement manufacturers argue that the current economic conditions just don’t allow for such reductions.
Aliko Dangote, the head of Dangote Cement and a major competitor to Lafarge Africa, recently shared insights on the heavy tax load that cement producers are dealing with. He pointed out that for every N1 earned, 52 kobo goes straight to taxes. The taxes impacting the industry include: 30% corporate tax, 7.5% value-added tax (VAT), 2% education tax, 1% health tax, 10% withholding tax on dividends for shareholders.
Dangote mentioned that these taxes, along with skyrocketing energy prices and fluctuating foreign exchange rates, have really squeezed profit margins, making it tough for companies to cut cement prices without taking a hit financially.
Looking at the financials, Lafarge Africa reported a record revenue of N696.7 billion in 2024, showcasing its success in growing market share and keeping demand strong. However, the cost of sales jumped by 76.09% to N350 billion, largely due to rising fuel, power, and raw material costs.
Specifically, fuel and power expenses hit N158.7 billion, while raw materials and consumables cost N73.4 billion. These increasing costs have pushed Lafarge to rethink its pricing strategies to stay profitable, which explains why the company is hesitant to follow through with government-mandated price cuts.
Even with these higher costs, gross profit rose by 67.72% to N346.7 billion, up from N206.7 billion in 2023. However, operational expenses also climbed significantly.
Selling and distribution expenses jumped to N120.4 billion, showing a 54.28% increase from last year, mainly due to rising transportation and logistics costs. Administrative expenses also went up to N40.1 billion, up from N27.5 billion the year before, primarily because of technical service fees and employee-related costs.
Lafarge saw a massive boost in other income, which skyrocketed by 706.05% to N7.1 billion, compared to N891.7 million in 2023. This surge was mainly due to the reversal of an impairment charge on property, plant, and equipment worth N4.6 billion, along with a government grant of N1 billion.
On the flip side, finance income dropped by 55.70%, decreasing from N4.6 billion in 2023 to N2 billion in 2024, reflecting lower returns on cash reserves. Meanwhile, finance costs shot up by 63.76% to N42.5 billion, driven by higher interest rates and debt servicing expenses.
Despite these challenges, pre-tax profit soared by 93.27% to N152.2 billion, showcasing Lafarge Africa’s ability to stay profitable even in tough economic times.
Lafarge Africa’s total assets rose to N990.5 billion, a 45.37% increase from the N681.3 billion reported in 2023. Non-current assets grew to N576.5 billion, reflecting investments in property, plant, and equipment, while current assets climbed to N414 billion, up from N239 billion the previous year.
In its asset mix, cash and cash equivalents reached N237.8 billion, giving the company a solid liquidity position. Inventory levels also saw a significant rise, with spare parts valued at N52.5 billion and finished goods at N25 billion.
Lafarge Africa’s retained earnings increased by 28.29% to N315.5 billion, highlighting its focus on long-term financial health and reinvestment in its operations.
Lolu Alade-Akinyemi, the CEO of Lafarge Africa, shared his optimism about the company's financial health and strategic path. He highlighted how the company has managed to thrive in a tough business landscape, achieving impressive revenue and profit figures.
“I am excited to report our record-breaking revenue of N697 billion and PAT of N100 billion for the full year 2024, a testament to our strong market positioning, operational efficiency, cost management, and dedication to value creation.
“Despite a challenging business environment, we have remained resilient, leveraging innovation and green growth in line with our sustainability ambitions, while also delivering value to our stakeholders,” he said.
Lafarge Africa is showing its dedication to rewarding its investors by announcing a final dividend of 120 kobo for every 50 kobo ordinary share, pending approval from shareholders and tax deductions. Shareholders listed in the Register of Members by March 28, 2025, will be eligible to receive this dividend.
This move highlights Lafarge’s solid financial position and its commitment to keeping investor trust intact, even in the face of wider economic challenges.