Lafarge Africa to reduce leverage position with N90b fresh capital

Lafarge Africa Plc has announced plans to raise up to N90billion by way of rights to existing shareholders, subject to all corporate and regulatory approvals.

According to the company, the restructuring is aimed at leveraging position, improve its industrial operations as well as strengthen its profitability.

Besides, reforms implemented by the firm to improve operational efficiency both in Nigeria and in South Africa, as well as effective management of its borrowing costs have impacted its performance, as the Nigerian operations posted a profit of N1.9billion for the second quarter (Q2) 2018.

Strong market growth in Nigeria within the period reflected the end of the recession in the cement market.

Lafarge attributed the success in the Nigeria operations to operational stability, success of the turnaround plan implementation, and volume improvement.

“Strong sales in Nigeria increased volumes in Q2 2018 by 18.7% (inclusive of export) and 9.6% in ReadyMix. In total, 68 kilotons of cement have been exported to Ghana with 28kt shipped in Q2 2018.”

However, the company explained that lack of large infrastructural projects impacted volumes in its South Africa operations, but added that revenues improved by 7.7 per cent on the back of price increase in all segments in Q1 and FX translational effect.

Lafarge also noted that turnaround plan in South Africa, which focused on cost containment, commercial transformation, and industrial stabilisation, is expected to improve its operations.

The Chief Executive Officer, Lafarge Africa, Michel Puchercos, said: “Our company saw strong market growth in Nigeria reflecting the end of the recession in the cement market. Cement demand has been on the rise since the beginning of 2018.

“We saw a 22 per cent increase in volume, benefiting from export to Ghana which began in Q4 2017.

EBITDA for our Nigeria operations was N19.1 billion and EBITDA margin of 32.2 per cent, thanks to robust operational performance and continuous effort to reduce cash costs.

Going forward, Puchercos expects, “New route-to-market initiatives to deliver and continuous focus on cash cost reduction will drive operational performance in H2.

Our South Africa management is focused on executing the turnaround plan implemented in Q1; the target for H2 is to deliver volumes.

“The focus is on growing the contribution margin.

Actions around efficiency and cost management are on track and will contribute to significant savings in production costs across all the segments in H2.”