
By Alex C
Lafarge WAPCO Plc (WAPCO) released its 2013 financial year scorecards which showed a 12% Year-on-Year (YoY) growth in revenue to N99 billion; an underperformance to industry growth which indicates a loss of market share.
WAPCO grew its Profit After Tax (PAT) by 92% to N28.3 billion. The growth feat reflected lower finance cost, as WAPCO deleverages balance sheet with its strong operating cashflow. Interestingly, the cement giants, secured pioneer status tax holiday in respect of the investment in Lakatabu plant, where it likely shipped c. 70% of 2013 sales; a strong upside on earnings.
As Dangote Cement (through its cement plant at Ibese) deepens its share of South West market through cement delivery to customers, WAPCO’s leadership in this niche market is put to test. UniCem is also ramping up capacity utilization; a competition to WAPCO in the South-East and South-South regions of the market.
With growing demand for cement to meet various construction needs expected in 2014 in view of the huge housing gap, rehabilitation in the North-East, growth of hospitality industry and sustainable growth in building & construction projects are expected to further see its revenue to grow higher.
WAPCO is likely to invest in route-to-market to grow market share. Given its strong cashflow, the company deleveraged its balance sheet, thereby easing off the debt service burden (12% of operating income when compared to 20% in 2012 financial year. While administrative cost rose to 21%, complementary investment income and improved cost-to-sales see WAPCO’s operating margin to 31.9%
Having secured a tax holiday in respect of its investment in Lakatabu plant, WAPCO posted a strong 92% growth in Profit After Tax (PAT) to N28 billion. Beyond the growth feat, the 35% return on average equity is impressive.
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