Earnings Update: Lafarge Africa Plc FY 2024 – Solid Performance, Promising Outlook.

Event

Lafarge Africa (“the Group”) had a dynamic year, characterised by the launch of new products, cost optimisation initiatives, and efforts to manage the impact of currency volatility on foreign obligations. Overall, the Group’s operational efficiency translated into sustained value creation for shareholders.

In 2024, the Group launched three new products – Watershield Cement, Gypsum Plaster (POP), and Eco Planet (launched in the East) to expand its market reach. We believe that these product launches, coupled with operational efficiency and an upgraded distribution network, were key drivers of the 12% volume growth reported by management. Additionally, to mitigate the impact of rising input costs, the Group implemented price increases during the year. While the Federal Government advocated for lower cement prices, pricing in the sector remained relatively high.

Outlook

We maintain a positive outlook for the construction industry in 2025, supported by a potential decline in interest rates and a moderation in inflation, both of which could foster economic improvement. A reduction in interest rates would lower borrowing costs, making it easier for businesses and individuals to finance construction projects, thereby boosting demand for building materials. Additionally, as inflation moderates, input costs such as cement, steel, and labor may stabilise, thereby improving profit margins for construction firms and encouraging more infrastructure investments. Given Lafarge Africa Plc’s apparent focus on enhancing capacity utilisation and expanding its distribution network, we believe the Group is well-positioned to capitalise on the anticipated growth in the sector.

Valuation

We retain our HOLD recommendation for the stock with a revised fair value of N75.15 (previously: N49.75). Notably, the news of Holcim Group signing an agreement to sell its shareholding in Lafarge Africa Plc to Hauxin Cement was well received by investors, resulting in a surge in the share price. Currently, the share price stands at N73.80, and our fair value of N75.15 offers a total return of 5% (inclusive of 3% dividend yield).

Please follow the link “Lafarge Africa Plc FY 2024 – Solid Performance, Promising Outlook” to view the whole report.                                                                                   

Thank you.