Cement Company of Northern Nigeria Plc has published its 2017 Financial Year results, declaring a gross revenue of NGN19.6 billion, representing an increase of 39% over 2016 position while the net profit of NGN3.2 billion is an increase of 157%.
According to the company, the board has proposed a final dividend of NGN1.25/s (49% payout).This equates to a yield of 7% on the last traded price.As evidenced in the result disclosed full year volume was 468,000 tonnes,which was only 4% below the volume achieved in 2016 .
In the views of analysts at Cardos Capital with cement prices largely expected to be stable this year, economic and infrastructure spending outlook broadly better, and FX (having a strong link with CCNN’s energy price) condition improving, we revise our sales volume estimate for 2018E to 491,000 tonnes (previously 426,000 tonnes) and maintain NGN46,000/tonne selling price estimate. On our assumptions, we have 2018E revenue of NGN22.6 billion (previously NGN19.6 billion), equating to 15% growth over 2017FY.
They posit that the strong margins achieved in 2017Financial Year will be tested in 2018,maintaining that : “The gross and EBITDA margins of 39% and 25% reported in 2017 were record highs, reflecting largely, the impact of pricing which outpaced the 23% increase in per tonne production cost.
“We note specifically, the 35% increase in per tonne energy cost, which in our view, mirrored the 21% increase in average crude oil price in 2017. Hence, with cement prices sticky upwards, and energy cost (accounting for about 60% of gross production cost) expected to reflect the surging price of crude oil (+4% YtD), we believe the margins delivered last year will be tested, and consequently, forecast both gross and EBITDA margins to soften to 36% (previously 35%) and 22% (previously 23%) respectively”.
Alhaji (Dr) Abdulsamad Rabiu the chairman of the company is a well known industrialist who is known as a man with the midas touch.He has continually maintained that CCNN will continually post good results going forward