BUA Cement Plc has disclosed that fuel and power consumed by the company increased by 64.66% to N43.580 billion in HY 2022 from N26,466 billion in 2021.
This represents 45% of the total cost of sales which stood at N97.503 billion in half year of 2022 as against the total cost of sales of N66.157 billion reported in 2021.
Cost of raw materials followed by 48.23% to N28.009 billion from N18.896 billion in 2021.
The increase was as a result of volume growth and inflationary pressures on the costs.
The increase in Nigeria’s manufacturing costs was mainly driven by energy costs due to increased production volumes and price increases for gas and fuel.
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The company like its peers experienced a significant increase in energy costs and raw materials. Some of these cost pressures were due to the depreciation of the Naira while others were due to macro-economic inflationary pressure, especially in the domestic market where inflation continued to rise.
Though raw materials import with its attendant foreign exchange burden has remained a militating factor, it is not the only factor responsible for the less than the sterling performance of manufacturers.
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Other challenges facing the industry include a dearth of infrastructure, especially stable electricity supply, high cost of petroleum products poor road network, multiple taxations, stiff competition and high import duties and tariffs, among others.
For instance, even years after the privatisation of the power sector, manufacturers are yet to see any appreciable improvement in electricity supply, forcing them to rely heavily on in-house power supply at a huge cost. Yet, power constitutes the single critical infrastructure to boost the manufacturing sector and create jobs.
Key financial highlights
- However, the company reported posted a profit after tax of N61. 363 billion for the half year ended June 2022 as against N43.395 billion in 2021, accounting for a growth of 41.41%.
- Profit before tax rose by 50.68% to N74.891 billion from N49.700 billion in 2021.
- Revenue grew to N188.561 billion in H1 2022 from N124.277, representing an increase of 51.73%.
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- BUA Cement Plc has said that it is contemplating capital raising for capacity expansion of BUA Cement’s integrated cement plant in Kalambaina, Sokoto State, Nigeria which shall include increasing its capacity from 2.0 million tons per annum (MTPA) to 8.0 MTPA.
- According to a statement obtained from Nigerian Exchange Limited (NGX), the company said “In furtherance of our disclosure obligations pursuant to Chapter 17 of the Rulebook, BUA Cement Plc hereby notifies Nigerian Exchange Limited (NGX), its esteemed Shareholders and the investing public that the Company has gone into discussion with the International Finance Corporation (IFC), serving as lead arranger in conjunction with a number of other lenders in a syndication pool, to obtain a loan for the expansion of BUA Cement’s integrated cement plant in Kalambaina, Sokoto State, Nigeria”.
- The expansion according to the statement signed by Hauwa Garba Satomi, Deputy Company Secretary shall include increasing its capacity from 2.0 million tons per annum (MTPA) to 8.0 MTPA and the development of other ancillary utilities (the Expansion Project).