Cement Company of Northern Nigeria (CCNN) producers of Sokoto
Cement has reported a net profit of N5.7bn (US$15.75m), 77 percent higher than
in 2017 figures and ahead of predictions. This is the first
earnings since
its merger with Kalambaina Cement Company.
While the merger was completed
in Q4’18, management elected to report the performance of the merged entities
as if the merger took place at the start of the year. Thus, whilst Net profit
soared y/y, EPS shrunk 83% to ₦0.44, given that shares outstanding jumped over
nine times to 13.1 billion units. Management proposed a dividend pay out of
92%, representing ₦0.40/share.
Revenue for the enlarged entity
reached N31.7bn; up 62 percent higher YoY and EBITDA rose by 86 per cent to
N7.9bn. The impressive topline figure came as a result of increased domestic
sales and exports. Overall, CCNN produced 0.76 million MT of cement and sold
over 0.74 million MT up 59% y/y.
Interestingly, whilst the sale
of cement in Nigeria rose by 49% y/y to ₦28.9 billion, export figures jumped
from ₦0.2 billion in 2017 to ₦2.9 billion in 2018. The company's management
plans to extend product distribution to the northeast and central regions of
Nigeria, as it does not expect the northwest of the country to absorb the
company's current, larger 2Mmta capacity.
Furthermore, even after
accounting for a rise in depreciation provisions (from the new plant) as well
as technical fees and costs related to the merger, EBIT still rose 86% y/y to
₦7.9 billion meanwhile, contrary to expectations, Net finance costs rose 1% y/y
to ₦283 million, dragged by lower than expected interest income. Thus, PBT rose
81% y/y to ₦7.6 billion.
There are however predictions
that CCNN will record significant upside to its Net income in 2019 and beyond
upon approval of Pioneer status by the NIPC and a moderate chance of CCNN
receiving approval on the new line.
Cement Company of Northern
Nigeria PLC (CCNN) produces and markets cement for various construction
purposes in Nigeria. Following a strategic re-orientation, Heidelberg Cement
Group (formerly a core investor) divested its CCNN shares in 2008 to Damnaz
Cement Company Limited (a Nigerian company). In 2010, BUA International Limited
acquired Damnaz Cement Company Limited and became indirectly the majority
shareholder in CCNN and its technical partner. CCNN currently operates as a
subsidiary of BUA International Limited.
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