CCNN rallies most since January on higher profits, margins
by David Ibemere
December 18, 2017 | 2:30 am| | | Start Conversation
Cement Company of Northern Nigeria (CCNN) rallied the most since the start of the year as improved energy costs, expansion in profit margins and stronger selling price fuelled higher earnings.
CCNN continues to strive with better performance and enhanced shareholder value, despite the massive challenges in the operating environment.
The cement maker’s earnings before interest, tax, depreciation and amortization (EBITA) increased to 26.90 percent in September 2017 as against 16.90 percent as at September 2016.
Pre-tax margins moved to 22.50 percent in the period under review as against 12.40 percent the previous year. Net margins increased to 16.90 percent in September 2017 from 8.90 percent as at September 2016.
CCNN’s stellar numbers can be attributed to higher realize sales volume as the company benefitted from discount on the price of cement in the period under review.
“Discount on cement sold by cement maker in Q3-17 alone was N580 million, compared to N332.9 million in the second quarter H117, according to research firm Cordros Limited.
CCNN’s gross margin increased to 38.80 percent in the period under review compared to 27.90 percent as at September 2016. Gross profit surged by 110.69 percent in the period under review.
The expansion in gross margins was underpinned by a decline in per tonne energy cost in the third quarter of year.
Cost to sales ratio or cost margins dipped to 51.85 percent in September 2017 from 73.01 percent the previous year. This means the company is spending on input cost to produce each unit of products.
Cement makers in Africa’s most populous nation and largest producer have seen margins improve on the back efficient energy mix as they switched from an expensive energy source- Low Pour Fuel Oil (LPFO)- to coal.
Despite the capacity constrain facing CCNN; it recorded a 47.66 percent increase in sales to N13.67 billion as it continues to embark on aggressive expansion plan with a view to increasing share of the market.
The Nigerian cement maker is reiterating progress on expansion work as it plans to increase capacity to 2 million metric tonnes next year.
For the first nine months through September 2017, CCNN’s net income surged by 182.22 percent to N2.03 billion in September 2017, the highest increase since 2014, based on data compiled by BusinessDay.
CCNN is the best performer among the Industrial Goods firms as its shares have gained 94.01 percent since the start of the year, outperforming the Nigerian Stock Exchange (NSE) All Share Index (ASI) OF 44.05 percent.
Investors may continue to swoop on the shares of cement markers in the country as government’s infrastructure spent is expected to spur demand for cement and building materials.
Experts are of the opinion that cement industry in Nigeria has an excellent long-term outlook owing to the huge infrastructure requirements in the country as well as the neighbouring countries in the West African sub-region.
CCNN has utilized the resources of shareholders in generating higher profit as return on average equity (ROAE) increased to 23.70 percent in September 2017 from 11.6 percent as at September 2016.
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