Cement makers are not utilizing assets in generating sales as evidenced the low fixed asset turnover as an economic downturn slowdown investment in new property, plant and equipment (PPE).
Investors and shareholders want to know effective an investment in assets has been in generating revenues.
For the first three months through March 2017, the cumulative fixed asset turnover of four largest producers of the building materials increased to 0.19 times compare to 0.13 times the previous year.
The fixed-asset turnover ratio is, in general, used by analysts to measure operating performance.
While a higher ratio means a firm is efficient, a ratio less than one per cent is considered abysmally poor, meaning that management should improve on its efficiency in managing company assets.
Ashaka cement recorded the highest as fixed assets turnover increased to 0.43 times in the period under review as against 0.07 times the previous year. Total sales spiked by 144 per cent, the highest among competitor firms.
Dangote Cement’s fixed asset turnover jumped to 0.18 times in the period under review from 0.12 times the previous year as sales moved by 45 per cent to N208.15 billion.
Lafarge Africa’s fixed assets turnover increased to 0.20 per cent in March 2017 from 0.13 per cent as at March 2016. Sales rose by 55.10 per cent to N81.31 billion.
Sokoto cement’s fixed assets turnover for the three of March moved to 0.41 times compared to 0.33 times the previous year. Sales increased by 22 per cent to N4.35 billion.