Completed rights issue, South African divestment to deleverage Lafarge Africa by N239bn

Lafarge Africa Plc.’s financial position has been further strengthened by about N239 billion as a result of its recently concluded fully subscribed rights issue as well as the divestment from its South African operations.

According to the company, the construction industry in South Africa still remains subdued and net sales down were down 2.1 percent in Q2 2019 despite price increase, nevertheless the Lafarge South African operations continue to yield positive results from its turnaround plan.

The company revealed these in a statement informing the public and stakeholders of its financial performance for the second quarter (Q2) and half year period (HY) of 2019.

According to the statement, the rights issue and divestment will strengthen the company’s balance sheet and significantly reduce financing costs.

Lafarge said although net sales dropped marginally by 1.2 percent in HY 2019 from N162.3 billion to N160.3 billion, continuous focus on cash cost reduction, which is an outlook for the 2019 financial year, will drive operational performance.

Other highlights of the result shows that the company reduced its net financial debt by 19.2 percent to N206.6 billion form N255.9 billion while Earnings per share (EPS) stood at N57 from a loss of N45 in the same period of last year.
Michel Pucheros, CEO of Lafarge Africa stated: “Our Strategy 2022 « building for growth » in Nigeria is delivering the expected results with strong volume growth, considerable EBITDA improvement, robust net income and operating cash flow development.

Pucheros noted that the company continues to deliver strong margins as a result of turnaround and cost reduction strategy in Q2 with improvement in commercial transformation, logistics performance, and industrial and energy efficiencies.

“Our ambition is to continue the acceleration of growth and earnings in 2019.”

The company noted that for the 2019 financial year, it expects softer cement growth compared to 2018. It said it also expects a stable pricing environment, implementation of route-to-market and energy initiatives to continue to deliver, continuous focus on cash cost reduction to drive operational performance, and a total divestment from South African operations in Q3.

Other financial highlights for the firm’s second quarter showed that net financial expenses for Q2 2019 was N4.8 billion compared to N13.5 billion in Q2 2018. The decrease was mainly driven by the repayment of all the company’s short-term loans and overdraft from the proceeds of the Rights issue which was successfully completed on March 8, 2019, Lafarge explained.

The company’s free cash flow stood at N28.4 billion with significant improvement over H1 2018’s N10 billion. While Net Profit After Tax for Q2 was restored to positive territory at N5.9 billion compared to -1.9 billion in previous year.