Stories BY PETER EGWUATU

Ashaka Cement Plc nine months results for the period ended 30 September, 2014 showed revenue growth of 3 per cent Year on Year, YoY to N17.3 billion and after tax profit growth of 103 per cent YoY to N4.3 billion.

Vetiva Capital in its analysis on Ashaka Cement, said “ Riding on prior upbeat quarterly results, particularly first quarter, Ashaka Cement’s nine months Earning Per Share , EPS rose 103 per cent YoY to N1.95, but fell 10 per cent behind our estimate of N2.17 due to a weaker-than-expected third quarter ,Q3 performance.

On a quarterly basis, profit after tax was down 47 per cent on Quarter On Quarter, QoQ to N847 million due to a sharp fall in other income from N243 million in second quarter, Q2 to a loss of N63 million in Q3.

In the Ashaka Cement financial analysis, Vetiva stated “We also acknowledge the significant surge in Tax for the 3-month period. We recall that Ashaka Cement’s profit after tax in the prior quarter (Q2’14) was largely supported by a tax credit of N17 million. However, an effective tax rate of 34 per cent was applied on the Q3’, 2014 results, hence, the sharp rise in tax expense and the resulting effect on net profit.

According to Vetiva “Continued cost efficiency mutes slowdown in top line.

Following from the slowdown in Q2, we estimate Ashaka Cement ‘s volume contracted a further 16 per cent to c.165,200 MT in Q3 (Q2 estimate: 197,000 MT) amidst a season (June –September) historically characterized by heavy rainfall – which disrupts building and construction activities and ultimately cement sales. Operating at an energy mix of 68 per cent coal and 32 per cent Low-Pour Fuel Oil (LPFO) (reported by Parent Lafarge Africa). Ashaka Cement’s energy efficiency improved further over the 3-month period as Cost of Sales declined at a faster pace than sales, down 25 per cent QoQ. Supported by the improved cost efficiency, gross profit inched up 2 per cent QoQ to N2.0 billion; consequently improving gross margin to 41 per cent from 34 per cent in Q2 and in line with the average for the year.”