Company confident of stronger 2025 results as FX volatility eases and operational efficiency improves
Despite facing a turbulent year marked by foreign exchange (FX) losses, BUA Cement Plc has expressed optimism for improved financial performance in 2025, citing recent macroeconomic reforms and internal operational gains.
At the company’s 2024 Annual General Meeting (AGM) held in Abuja, Chairman of BUA Cement Plc, Abdul Samad Rabiu, disclosed that the company incurred a substantial FX-related loss of ₦92 billion in the 2024 financial year. The losses stemmed from ongoing expansion efforts during a period of intense naira devaluation and FX market volatility.
Expansion Amid FX Crisis Deepens Exposure
Rabiu explained that BUA’s strategic expansion, which involved importing equipment from international suppliers—many of whom required upfront Letters of Credit (LCs)—exposed the company to shifting exchange rates. Many of the LCs were opened when the naira traded between ₦450 and ₦600 per US dollar. However, by the time payments were due, Nigeria had moved to a unified FX regime, and the naira had depreciated significantly.
“If you’re starting a $5 million project, the suppliers require a financial guarantee. We opened LCs at ₦400–₦500, but by the time the LCs matured, the rate had shot up. That’s why we incurred FX losses,” Rabiu noted.
In 2023, BUA Cement had already recorded FX losses of ₦69 billion, and the higher ₦92 billion loss in 2024 represented the continued fallout from the FX unification policy and associated currency depreciation.
Signs of Recovery in 2025
Despite the losses, Rabiu projected a more positive outlook for the company’s performance in 2025. He noted that BUA Cement had significantly reduced its FX exposure and was benefiting from an improved operating environment.
“We’ve addressed most of the FX exposure, and operationally, we’re improving. Our Q1 2025 result showed an after-tax profit of ₦81 billion—more than our total profit for all of last year. If this trend continues, we’re looking at a possible ₦250 billion full-year profit,” he stated.
He attributed the expected turnaround to a combination of stabilising exchange rates, improved cost controls, and a more predictable FX market, thanks to ongoing policy reforms.
Commendation for CBN Reforms and Transparent FX Market
Rabiu praised the Central Bank of Nigeria (CBN), led by Governor Olayemi Cardoso, for implementing reforms that have introduced greater transparency and reduced arbitrage in the FX market. He highlighted that the unification of exchange rates, though initially painful, had removed distortions that previously plagued Nigeria’s monetary system.
“I used to visit the Central Bank every two weeks seeking FX. Today, I’ve only met the current CBN Governor twice since his appointment—because now, FX is available through banks at market rates,” Rabiu said.
He added that as the naira stabilises—now trading at approximately ₦1,529 to the dollar, down from highs of nearly ₦3,000—businesses can plan more effectively and potentially reduce prices, including for commodities like cement and food.
Cement Prices Remain Stable Despite Production Challenges
On the issue of cement pricing, Rabiu defended the current market price of around ₦10,000 per bag, arguing that it remains competitive when compared to global standards, especially in light of Nigeria’s energy and FX challenges.
“We’re selling cement at about $100–$110 per ton. A decade ago, it was over $250 per ton in Nigeria. When people talk about prices, they often forget that the naira has depreciated fivefold—from ₦300 to ₦1,500—while cement prices have only doubled,” he explained.
He emphasized that cement prices have not risen disproportionately in real terms, given inflationary pressures and rising input costs—particularly energy and imported materials that are priced in dollars.
Efficiency Initiatives and Local Energy Investments
To manage rising production costs, BUA Cement is investing in energy infrastructure aimed at reducing its dollar-denominated operational expenses. Rabiu revealed plans to build a mini LNG (Liquefied Natural Gas) plant that will harness Nigeria’s local gas resources to generate power for its operations.
“Energy is our biggest expense. By building our own LNG facility, we will lower costs and pass those savings on to customers while also improving our margins,” he said.
Shareholders Approve Dividend Amid Modest Profit
Despite the challenging economic landscape, BUA Cement managed to post a modest profit after tax of approximately ₦69–₦70 billion in 2024. The company maintained a strong liquidity position, grew its sales, and preserved its balance sheet strength.
Shareholders at the AGM approved a dividend payout of ₦2.05 per share and lauded the management’s resilience and performance under difficult macroeconomic conditions.
Conclusion: A Turning Point Ahead
Rabiu concluded on an optimistic note, stressing that while reforms take time to yield full results, the country is on the right path. He reaffirmed BUA’s commitment to supporting the Nigerian economy through long-term investments and price stability.
“N₦10,000 per bag is not excessive given the scale of investment and current FX levels. As conditions continue improving, I believe cement prices—and general cost of living—will trend downward.”
With reduced FX risks, stable monetary policy, and investments in cost-saving infrastructure, BUA Cement appears poised for a stronger 2025.