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Lafarge Africa hopeful of return to profitability on key reforms

By Femi Adekoya
26 April 2018   |   1:33 am
Following an improvement in its loss position amid performance concerns, the management of Lafarge Africa Plc has expressed optimism about the firm’s return to profitability as key reforms begin to reflect in its operations.

Lafarge Africa Plc

Following an improvement in its loss position amid performance concerns, the management of Lafarge Africa Plc has expressed optimism about the firm’s return to profitability as key reforms begin to reflect in its operations.

Specifically, the cement manufacturer explained that reforms such as improvement in operational efficiency both in Nigeria and in South Africa, as well as effective management of its borrowing costs are expected to enhance its bottom-line in the nearest future.

As part of measures to check the cost of borrowing, the firm is hoping its shareholders would approve its request to issue another bond while improving its industrial operations.

In a chat with journalists yesterday, the firm’s Chief Financial Officer, Bruno Bayet noted that while South Africa’s performance impacted negatively on its Q1 results, a restructuring exercise has been put in motion to ensure stability and reversal to profitability.

According to him, Lafarge Africa’s turnaround plan in South Africa, which focused on cost containment, commercial transformation and industrial stabilisation, is expected to restore profitability despite Q1 loss.

Bayet added that the cement manufacturer’s energy improvement plan continues to outperform with increased use of alternative fuel and coal, noting that Q1 revenues were relatively stable compared to corresponding period in 2017, thanks to industrial operations in Nigeria within the period.

In terms of revenue, the firm also recorded net sales of N81 billion for the first quarter of 2018, slightly lower than the corresponding period in 2017 by 1% due to volume in Nigeria and South Africa.

Recurring EBITDA in Nigeria maintained margins at 29% and delivered strong operational performance.The CEO of Lafarge Africa Plc, Michel Puchercos said the results were affected by timing of inventory movements and performance in South Africa.He attributed the strong margins in the Nigerian business to the commercial and energy strategies that were implemented.

A statement credited to Puchercos showed that Lafarge Africa Plc’s commercial, logistic and industrial operations in Q1 2018 continued to improve strongly despite inflation. In its projections, the firm expressed optimism of a favourable financial year following positive signs of recovery in March.

“Our business turnaround actions will be consolidated further in 2018 through energy optimisation as well as commercial and logistic improvement. The overall goal is to create value for shareholders through an attractive growth profile and good margins”, Bayet added.

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