WAPCO | Lafarge Africa Q1 2024 Quick Take : FX losses drag bottom-line

    In its recently released unaudited Q1 2024 results, Lafarge Africa reported a 50% y/y Revenue growth to N137.77bn in Q1 2024 from N91.82bn in the prior period (Q1 2023). Similarly, on a q/q basis, Revenue was up by 18.3% from N116.42bn in Q4 2023. The broad-based growth in cement sales (up 49.14% to N133.42bn), aggregate and concrete sales (up 84.43% to N4.18bn), and other products (up 76.81% to N179m) contributed to the rise in topline growth in Q1 2024. While no information has been provided on the Revenue breakdown, we attribute the company’s top-line growth to a mix of price and volume growth.

    Given a y/y increase in variable costs (up 61.57% y/y to N45.54bn), production fixed costs (up 86.82% y/y to N11.20bn) and maintenance fixed costs (up 104.84% y/y to N8.70bn), Cost of Sales (adjusted for depreciation) increased by 70.3% y/y to N65.45bn in Q1 2024 from N38.43bn in Q1 2023. We attribute the rise in cost to the impact of the steep devaluation of the currency on the cost of imported raw materials, elevated inflationary pressures, and rising energy costs. Despite the rise in Cost of Sales, Gross Profit grew by 35.5% y/y to N72.32bn in Q1 2024, while Gross margin declined by 5.6ppts to 52.49% in Q1 2024 from 58.14% in Q1 2023.


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