Industrial Goods Stocks
The industrial sector is beset with rising cost which deplete profitability. And to deliver value to investors, companies are embarking on cost containment.
DANGOTE CEMENT
The generally negative market sentiment took its tolls on Dangote Cement stock. One of the most capitalized stocks in the market, its performance largely affects the equity market performance. Dangote Cement lost 10.16 percent in share price between January and April, contributing substantially to the over 7 percent contraction in the Allshare index. during the period.
Fund managers believe Dangote Cement w rebound in coming months, This optimism is hinged on the company’s 2021 Q1 result which showed 16 percent increase in revenue to N1.03 trillion. Profit after tax grew 37.7 percent to N276.1 billion with earning per share up 36.9 per share to N16.14. The growth in revenue and profitability is due to the 8.6 percent increase in sale volume form its Nigerian market which rallied 12.9 percent to 15.5 metric tonnes. Also, contributing to the lift in profitability was the cost containment strategy that the company deployed as well as the low alternative energy source which was aimed at reducing cost and foreign currency fluctuation.
Dangote Cement’s completion of share buy back and repurchase of outstanding shares also aided positive sentiments in the stock. The company is one of the highest dividend paying firms and records 31.3 percent returns opn equity.
LAFARGE
Lafarge Africa a bellwether stock listed in the industrial goods sector of the Nigerian Exchange Group joined the bears, lost 4.7 percent between January and April on account of general negative sentiment. This is in spite of the upward trend in its 2021 Q1. During the period, revenue increased from N63.69 billion in 2020 to N71.47 billion with gross profit up to N19.09 billion from N17.63 billion and increase in profit after tax from N8.06 billion to N9.23 billion. Earning per share shranked from 57 kobo to 21 kobo. At the close of 2020 financial year, Lafarge Africa reported rise in revenue from N219.99 billion to N230.57 billion. The company demonstrated efficiency in cost management resulting in fall in cost of sales from N157.05 billion to N163.33 billion. Sell and marketing expenses also declined from N5.09 billion to N4.22 billion. The cost containment did not however safe the company from decrease in profitability as
INDUSTRIAL GOOD SECTOR profit after tax went down from N113.10 billion to N30.84 billion as earning per share fell to 26 kobo from N191 kobo. Lafarge’s 2021 profit after tax is projected to be N26.4 billion with target price of N28.18 per share.
BUA CEMENT
BUA Cement grew revenue from N53.96 billion in 2021 Q1. Cost of sale rose to N 32.05 billion from N29.99 billion while sell and distribution cost increased from N 1.11 billion to N 1.56 billion. Profit after tax rose to N22.36 billion from N19.7 billion leading to increase in earning per share from 58 kobo to 66 kobo. BUA Cement 2021Q1 result suggest effort by the company to contain cost and grew profitability given its performance in the 2020 financial account. As at the end of December 2020, revenued increased from N171.5 billion in 2019 to N209.46 billon. Following increase in cost of sale from N93.07 billion to N113.96 billion and increase in distribution cost from N4.31 billion to N4.86 billion, profit after tax berthed at N72.34 billion from N60.61 billion. The company grew earnings per share N1.79 to N2.14. Between April 21 and May 11, 2021, BUA Cement appreciated 7.15 percent.