CCNN records 56.77% rise in Q3 profit buoyed by reduced costs
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IMAGE: Cement Company of Northern Nigeria, »
Cement Company of Northern Nigeria (CCNN) has recorded a 56.77 percent rise in third quarter (Q3) profit buoyed by effective cost savings, analysis of the financial statement reveals.
For the first nine months through September 2014, the company’s profit after tax surged by 56.77 percent to N1.73 billion from N1.10 the same period of the corresponding year (Q3) 2013.
Earnings per share (EPS) increased by 56.82 percent to 138.8k from 88k last year.
The growth at the profit was fuelled by a 35.35 percent reduction in operating expenses to N1.88 billion and a 21.64 percent drop in finance costs to N83.64 billion.
The company also reduced its costs of production as cost of sales fell by 2.41 percent to N7.81 billion from N8 billion last year, while cost of sales margin were down to 63.65 percent in 2014, as against 66.28 percent in 2013.
Analysts attribute the reduction in input and operating costs to improved transportation of low pour fuel oil (LPFO) from the South, and they also said the company may have switched to a cheaper source of energy like coal, which is expected to reduce fuel costs.
LPFO is the most commonly used fuel in Nigeria, given its wide availability relative to other fuel sources, despite being the least efficient from a calorific-value perspective.
Gross profit margin increased to 36.34 percent in Q3 2014, compared with 33.71 percent due to improved LPFO from Kaduna refinery.
Net margin, a measure of profitability and efficiency jumped to 14.1 percent to 9.10 in 2013.
However, at the top-line level CCNN growth slowed as cement producers experience weak or seasonal cement volume and slow in spending on infrastructure due to the delay in budgets.
Revenues were up slightly by 1.68 percent to N12.27 billion in Q3 2014, in the review period as against N12.07 billion the preceding year.
It is expected that the demand for housing and building material buoyed by rapid urbanisation will drive the growth of CCNN.
CCNN is a 50.72 percent-owned subsidiary of BUA Group, a Nigerian conglomerate with business interests in the sugar, flour, real estate, oil and ports and terminals industries.
It was incorporated in 1962 and commenced production in 1967, with an initial installed capacity of 100,000tpa at the Kalambaina plant. This was expanded to 0.5mn tpa in 1985, at which time the first line was closed down due to its uneconomic mode of operations.
The company’s return on average equity (ROAe) was 12.95 percent while return on average assets (ROAA) stood at 21.09 percent, according to data compiled by BusinessDay.
CCNN share price closed at N14.06 on the floor of the NSE, while market capitalisation was N17.69 billion.
Article Credit: Businessdayonline