Lafarge Africa plc, a cement manufacturer, is strengthening
operations across the continent with a view to increasing its share of
the market as the company plans to lure shareholder with a N16 billion
dividend.
The strategic decision of Lafarge SA, the French cement maker and
Holcim Limited of Switzerland to come together and combine Nigeria and
South Africa assets to form Lafarge Africa to compete with Africa market
leader Dangote Cement plc, has yielded fruits as the new company’s
production capacity has more than doubled.
Lafarge Africa’s current production capacity surged 166.67 percent to 12 million tons from 4.5 million tons.
This is in addition to the 3.5 million cubic metres of ReadyMi coco
created and over 5.0 million tons of Aggregates that have been added to
the portfolio.
The creation of Lafarge Africa allows the company to continue in its
drive to be the best in the areas in which it operates, according to
Guillaume Roux, group managing director/CEO of the company, said in an
emailed statement to BusinessDay.
“The broader geographic coverage means that Lafarge Africa will be
better positioned to serve its customers more widely. It also places the
company in a stronger position to be able to benefit from the economic
growth and development opportunities available in both Nigeria and South
Africa,” said Guillaume.
Analysts had said the synergy was aimed at responding to its more
aggressive rival, Dangote Cement, and to consolidate Lafarge Africa’s
position as a leading cement firm. They had also envisaged that the
company will gain production capacity and market share across the
continent.
“Dangote Cement got a lot of attention in the continent with
acquisitions, which enabled it to source funds and build capacity. Some
of that attention will now be shifted to Lafarge Africa and competition
deepened,” said Mike Nwanolue, an analyst at Lagos-based Greenwich Trust
Group Limited, in response to the company’s listing last year.
Lafarge Africa is giving back to the owners of the business for
investing in it as it plans to declare a dividend of N16 billion. This
translates to a dividend payout of 46.66 percent and a dividend yield of
3.67 percent, which means the company is pursuing an aggressive
dividend policy.
For the year ended December 2014, Lafarge Africa posted an
operational profit after tax of N37 billion, which are eight higher than
prior year after adjusting for one-offs. Sales were flat at N206
billion when compared with 2013.
The Nigerian operations showed a growth of eighth cushioning the
short-term market challenges in South Africa. EBITDA was relatively
stable at N55.3 billion in 2014 compared with N55.7 billion in 2013,
with Nigeria growing by 16 percent.
For the first quarter ended March 31, 2015, the company’s sales
increased by 15 percent to N57 billion from N49.37 billion the previous
year. Net income was N8.58 billion.
“Our company has delivered a good performance in spite of the general
elections and market uncertainty,” said Olusegun Osunkeye, chairman of
the company, in the emailed statement.
Lafarge Africa has increased its stake in Asaka Cement through a
Mandatory Tender Offer (MTO) to all minority shareholders of Ashaka
Cement.
This strategic move by the parent company is to have a firm grip and control of its subsidiaries.
“It provides the minority shareholders of AshakaCem an opportunity to
be part of a pan-African entity that has footprints in Nigeria and,
South Africa,” said Osunkeye.
Analysts say Lafarge Africa is in a growth spurt as the rapid
urbanisation and then Nigeria’s burgeoning middle class that crave for
accommodation will drive the building materials.
Lafarge Africa’s has assets of N320.40 billion while share
outstanding was N4.55 billion. The company’s share price closed at
N98.20 on the floor of the exchange.
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