Equities analysts at CSL Stockbrokers Limited have downgraded BUA Cement Plc to sell following the company’s single digit earnings performance for 2024. BUA Cement reported a 90.5% year on year revenue growth amidst challenging business environment and increased rivalry among the cement oligarchy.

Possibly supported by volume, and price hikes, the company’s revenue reached N876.47 billion in 2024 from N460.00 billion in 2023. “While no information has been provided on the revenue breakdown, we attribute the company’s top-line growth to increases in both price and volume”, CSL Stockbrokers said in a note.

Analysts said the company’s adjusted cost of sales increased by 114.7% year on year, reaching N551.15 billion, up from N256.73 billion in 2023. CSL Stockbrokers attributed the surge to significant growth in operations and maintenance service charges, energy costs, and lubricants, resulting from the heightened inflationary pressures and continued currency devaluation.

In the year, maintenance service charges increased by 146.28% year on year, energy costs climbed by 129.16%, and lubricant cost rose by 103.64%. Despite these cost increases, gross profit grew by 60.0% year on year, reaching N325.32 billion in 2024, CSL Stockbrokers said in the review.

However, analysts noted that the company’s gross margin contracted sharply by 707 basis points, falling to 37.1% from 44.2% in 2023. Operating Expenses which was adjusted for depreciation which is non-cash flow element rose by 54.80% year on year to N54.47 billion in 2024, compared to N35.19 billion in 2023.

Analysts at CSL Stockbrokers said the increase was driven by higher administrative expenses, which surged 81.9% year on year to N21.11 billion, and a 41.5% year on year rise in selling & distribution expenses to N33.36 billion.

BUA Cement other Income—which includes insurance claims, government grants, and miscellaneous earnings—declined sharply by 48.4%, falling to N1.06 billion from N2.06 billion in 2023.

CSL Stockbrokers analysts said BUA Cement also faced significant foreign exchange (FX) losses, which surged to N92.11 billion, up from N69.96 billion in 2023, primarily due to the continued devaluation of the Naira.

Despite these challenges, earnings before interest tax depreciation and amortisation (EBITDA) rose by 79.5% year on year, reaching N179.81 billion from N100.19 billion in 2023. However, the EBITDA margin declined by 127 basis points, settling at 20.5%, down from 21.8% 2023.

BUA Cement Plc operating profit nearly doubled, climbing to N144.30 billion, up from N74.70 billion in 2023. “This growth came despite a 39.3% year on year increase in depreciation and amortization, which rose to N35.51 billion”. At the same time, BUA Cement reported a significant surge in net finance costs due to borrowing activities.

Its audited results revealed that net finance cost surged by 493.2% in 2024, rising to N41.85 billion from N7.05 billion in 2023. Analysts said this increase was driven by a sharp increase in the company’s finance costs, which rose to N60.04 billion from N19.94 billion amidst a moderate growth in finance income. BUA finance income climbed to N18.19 billion in 2024 from N12.88 billion.

Pre-Tax Profit increased by 48.2% year on year, reaching N99.63 billion, up from N67.23 billion in 2023. However, tax expense surged to N25.72 billion, a sharp contrast to the tax credit of N2.23 billion recorded in the previous year.

As a result, net income saw moderate growth of 6.4% year on year, rising to N73.91 billion, up from N69.46 billion in 2023. Earnings per Share (EPS) increased by 6.4% year on year, reaching N2.18/s, compared to N2.05/s in the prior year.

Based on its fair value estimate, equities analysts set BUA Cement's target price at N77.52 per share but the company as current price of N93, suggesting overvaluation.

BUA declared a final dividend of ₦2.05 per ordinary share of 50 Kobo each, subject to appropriate withholding tax and shareholders’ approval.

The amount is expected to be paid to shareholders whose names appear in the Register of Members at the close of business on the 8th day of August 2025.