Lafarge Africa Plc, one of Africa’s largest cement manufacturers, managed to sustain profitability in the second quarter (Q2) of the year as an over 70% jump in selling and distribution costs dragged on the company’s profit after tax.
In the firm’s unaudited financial statement obtained by Investors King, revenue rose by 30.5% from N73.546 billion recorded in the second quarter of 2021 to N95.981 billion in the period under review.
Cost of sales (production) jumped 30.3% to N42.055 billion, up from N32.267 billion reported in the same period of 2021.
The increase weighs on gross profit as expected. Gross profit stood at N53.926 billion, against N41.279 billion achieved in the corresponding period of 2021.
Similarly, selling and distribution costs jumped a whopping 73.6% from N13.034 billion in Q2 2021 to N22.631 billion in Q2 2022. While other income dipped 38.36% to N89.631 million from N145.415 million in Q2 2022.
Therefore, the surge in cost of production, selling and distribution costs plunged operating profit to N26.514 billion. Still, a 12.8% increase when compared to the N23.515 billion realised in Q2 2021.
Finance income declined from N191.142 million to N136.945 million. Again, finance costs also jumped by over 50% to N1.239 billion in the period under review.
All these increases in expenses and declines in income dragged on profit before tax to N25.411 billion, a 3.5% increase from N23.976 billion in Q2 2021.
Commenting on the company’s performance, Khaled El Dokani, CEO of Lafarge Africa, said: “Our Q2 2022 performance shows significant improvement over Q2 2021, with net sales of +30.5%, recurring EBIT of +12.8% and net income of +3.5%.
“Our H1 2022 results are even more impressive, with 28.7% and 32.1% growth in net sales and net income,
respectively.
“This further confirms the consistent resilience and robustness of our business. We are equally pleased with the progress we are making on sustainability; our use of affordable clean energy and agroecology footprint are in accordance with our net zero pledge journey.”
On the outlook for the second half of the year, Lafarge Africa’s boss predicted a positive demand momentum expected in H2 2022.
He said, “We will continue to maximize volume opportunities across our markets and actively manage our costs and remain focused in our drive towards sustainability.”