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The Cement Company of Northern Nigeria (CCNN) Plc’s profit after tax stood at N3.22 billion as at December 2017, representing a 106.50 percent surge from the N1.56 billion recorded five years ago.
Revenue followed the same growth trajectory, hitting N19.58 billion in December 2017. This represented a 29.83 percent increase from the N15.31 billion recorded in December 2013.
The company’s shares have gained 71.31 percent since January 2, 2015, to close at N17.80 percent at close of trading day on Wednesday April 6, 2018.
The relative peace in the northern part of the country and low competition where the company supplies cement were major drivers of utilisation rates for the company.
The cement maker is efficient in deploying shareholders’ resources in generating higher profit as net profit margins hit 16.25 percent in the period under review, a 0.60 point increase from 10.23 percent recorded five years ago.
CCNN’s energy mix has yielded fruit as cost of sales ratio fell to 61.25 percent in the period under review, from 69.25 percent reported in December 2016.
This means the company has spent less to produce each unit of product.
A price increase across products that helped to outdo the rise in per tonne production underpinned margins. CCNN is lowly geared, which means it is not beleaguered by debt as debt-to-equity ratio stood at 13 percent as at December 2017, as against five percent recorded in December 2013.
With the positive economic outlook and government plans to spend on infrastructure, cement makers’ sales volume could get a boost.
The International Monetary Fund (IMF) has projected that Nigeria’s economy will grow by 2.1 percent in 2018.
The forecast which represents 0.2 percent from the 1.9 percent projected in October 2017.
President Muhammadu Buhari has presented a record budget of N8.60 trillion to the National Assembly for 2018.
Out of the total budget figure, N2.4 trillion has been earmarked for capital spending.
Nigeria has infrastructure deficit of $2 trillion, according to the Africa Finance Corporation.
The 17 million housing deficit is a low hanging fruit for cement makers to grow sales volume.
“We estimate that an additional two million housing units by 2020e from the public sector alone (as highlighted in the economic recovery plan), will unlock about 20-24 million tonnes (mt) of cement over 2018e-2020e,” said analysts at RMBNS, in a recent report on Nigeria’s cement industry.
BALA AUGIE
