doubled recurring EBITDA
…Achieves Fuel Flexibility and Strong EBITDA Margin Progression
…Successful right issue concluded in March
In full year results for the year ended December 2017, Lafarge Africa Plc recorded net sales of N299 billion. This represents a 36% growth relative to the corresponding period in 2016. Recurring EBITDA doubled to N57,6 billion. The CEO of Lafarge Africa Plc Michel Puchercos attributed the strong margins in the Nigerian business to cost initiatives and more favorable pricing.
Mr Puchercos disclosed that Lafarge Africa Plc’s industrial operations in 2017 were stable with plants operating at high reliability levels. He also noted that the energy optimization plan for the company has been successful with increased use of Alternative Fuel and Coal to offset gas shortages in operations in the West while plant operations in the eastern and northern part of the country relied mainly on gas and coal. He said these logistic, commercial and operational initiatives helped to sustain market share in the year under review.
The South African business thrived in a challenging business environment, operations are set to stabilize in year 2018. The Lichtenburg plant returned to normal operations in the course of the year. A turnaround plan was initiated in order to transform the company’s operations.
A detailed review of key projects in Nigeria such as the Road in Calabar and of mothballed assets in South Africa led to an impairment of 19,1bnN. The combination of these impairments and the net loss in South Africa of 18,7bnN led to a Group Net loss of 34,6bnN compared to a profit of 16,8bnN in 2016.
The expected recovery in the macroeconomic environment in Nigeria is likely to have a positive impact in the overall cement market in Nigeria. Our Business turnaround actions will be consolidated further in 2018 through energy optimisation as well as commercial and logistic improvement. “In 2018 we shall implement a continuous improvement programme that will see us building on EBITDA margins above the 35% benchmark,” says Lafarge Africa CEO Michel Puchercos. The capital expenditure expectation for Nigeria will be mainly devoted to Energy and Production Optimisation.
For South Africa the economy is expected to grow by 3% in 2018. The turnaround plan of the South African operations is focused on cost containment, commercial transformation and industrial stabilsation. The overall goal is to create value for shareholders through an attractive growth profile and good margins.
In 2017, our objective was to optimize our ownership and financing structure. The simplification of our ownership structure was achieved through the delisting of AshakaCem and subsequently a scheme of the re-organisation of capital which enabled minority shareholders to exchange their shares for Lafarge Africa shares. This was successfully closed in Q4 2017. Lafarge Africa Plc now owns 100% of the shares of AshakaCem. UniCem and Atlas were also merged into Lafarge Africa in Q4 2017 for optimal benefit of the fiscal attributes of merging entities.
Lafarge Africa successfully raised N131B by way of Rights Issue, the largest Rights Issue by size raised in Nigeria so far. Minority participation was in the 50s, while LafargeHolcim subscribed to the un-allotted portion. This brings the ownership of Lafarge Holcim to 76.32% from 71.35% prior to the Rights Issue