Last Update 02 Nov 25
Fair value Increased 30%BUA Cement Plc Q2/H1 result– Strong Margin Resilience Amid Cost Pressures
BUA CEMENT PLC Q3 2025 RESULT: STRONG EARNINGS MOMENTUM UNDERPINNED BY ROBUST REVENUE GROWTH AND EXCHANGE GAINS
Strategic Context
BUA Cement Plc delivered an exceptional performance in the nine months ended September 30, 2025, underscoring its market leadership in the Nigerian cement industry and the resilience of its operational strategy amid a challenging macroeconomic environment. The company benefited from sustained infrastructure spending, continued expansion in domestic demand, and disciplined cost optimization.
Despite the lingering effects of inflationary pressures, high energy costs, and exchange rate volatility, BUA Cement maintained strong margins and enhanced profitability through improved plant efficiency, better logistics management, and effective pricing strategies. The company’s balance sheet remains solid, providing a firm foundation for ongoing expansion projects and long-term competitiveness.
Financial Performance Overview
Revenue Performance BUA Cement recorded a revenue of ₦858.7 billion in the first nine months of 2025, reflecting a 47.2% year-on-year increase from ₦583.4 billion in the same period of 2024. On a quarterly basis, revenue rose to ₦278.4 billion in Q3 2025, compared to ₦219.5 billion in Q3 2024. The growth was driven primarily by higher volumes and a well-calibrated price adjustment strategy, reflecting strong market demand and expanded capacity utilization across its production plants.
Cost of Sales and Gross Margin Cost of sales stood at ₦429.5 billion, up from ₦402.6 billion in the prior year. Despite the increase in input costs (notably energy and distribution), the company’s gross profit surged to ₦429.3 billion, more than double the ₦180.8 billion reported in the corresponding period of 2024. This represents a gross margin of 50%, demonstrating improved operational efficiency and better economies of scale from newly commissioned lines.
Operating Expenses and Profitability Total operating expenses (selling, distribution, and administrative) amounted to ₦64.9 billion, representing 7.6% of total revenue — a commendable improvement in cost control compared to prior periods. Selling and distribution costs grew moderately to ₦47.5 billion (from ₦26.7 billion), reflecting higher haulage and energy expenses, while administrative expenses remained contained at ₦17.4 billion.
Consequently, operating profit rose sharply to ₦365.6 billion, up 165.4% year-on-year from ₦137.8 billion in the same period of 2024. This robust operating leverage underscores the company’s strategic efficiency and disciplined cost optimization across business segments.
Net Finance and Exchange Impact Finance income for the period stood at ₦9.9 billion, compared to ₦14.7 billion in the prior year, reflecting lower interest yields on deposits. Conversely, finance costs increased to ₦56.1 billion, up from ₦32.0 billion, mainly due to higher borrowing costs associated with funding expansion projects and elevated interest rate conditions.
However, the company recorded a net exchange gain of ₦21.6 billion, compared to a ₦57.4 billion loss in the same period last year, providing significant relief to the bottom line and highlighting effective foreign currency exposure management.
Bottom Line Profit before tax (PBT) soared by 448% year-on-year to ₦338.6 billion, compared to ₦61.8 billion in 9M 2024. After accounting for income tax of ₦48.7 billion, profit after tax (PAT) settled at ₦289.9 billion, representing a 492% growth from ₦48.97 billion in the prior year.
Basic earnings per share (EPS) improved remarkably to ₦8.56 (855.9 kobo) from ₦1.45 (144.6 kobo), reinforcing the company’s strong value creation for shareholders.
Balance Sheet Strength
BUA Cement maintained a robust financial position, with total assets rising 4% to ₦1.63 trillion as of September 2025 (₦1.57 trillion in December 2024).
Key highlights include:
- Cash and short-term deposits increased to ₦154.8 billion (from ₦84.7 billion), reflecting improved liquidity and cash flow generation.
- Inventories rose slightly to ₦169.1 billion, aligning with expanded production and distribution activities.
- Due from related parties increased to ₦68.5 billion, likely linked to intercompany receivables for supply chain and logistics coordination.
On the liabilities side, total borrowings (short and long-term) amounted to ₦472.8 billion, with a modest decline in long-term obligations due to gradual repayment and refinancing activities. Shareholders’ equity grew significantly to ₦608.9 billion, up from ₦388.5 billion, driven by retained earnings from the strong profit growth.
Strengths
- Exceptional profit growth: 492% YoY surge in PAT, underpinned by higher volume, pricing power, and exchange gains.
- Improved cost management: Operating expenses held steady relative to revenue, enhancing efficiency.
- Strong balance sheet: Rising equity base and healthy liquidity position support expansion.
- Operational efficiency: High plant reliability and energy optimization sustain margin expansion.
- Favorable exchange outcome: Positive FX revaluation boosted bottom-line performance.
Weaknesses
- Rising finance costs: Higher interest rates increased debt servicing burden.
- Energy cost exposure: Cement production remains sensitive to gas and coal price fluctuations.
- Working capital pressure: Growth in related-party receivables may weigh on cash conversion.
Outlook
BUA Cement is poised for continued growth, leveraging Nigeria’s infrastructure drive, housing demand, and industrial expansion. The commissioning of new capacity, particularly in Sokoto and Edo, is expected to enhance supply efficiency and further reduce per-unit costs.
However, elevated energy prices, potential FX volatility, and high interest rates could pose short-term headwinds. Management’s continued focus on cost efficiency, energy substitution (LNG and alternative fuels), and supply chain optimization will be critical in sustaining profitability.
In the medium term, the company’s strategy of vertical integration, operational automation, and export market penetration positions it for consistent top-line expansion and long-term shareholder value creation.
Analyst Commentary
BUA Cement’s Q3 2025 results affirm its status as a leading player in Nigeria’s cement sector, combining aggressive capacity expansion with disciplined financial management. The impressive margin growth and strong bottom-line performance signal high operational efficiency and effective strategic execution.
The shift from exchange losses to a substantial gain demonstrates prudent balance sheet management and improved FX hedging practices, providing earnings stability in an uncertain macroeconomic climate.
For investors, the company presents a compelling case for sustained dividend capacity, capital appreciation potential, and defensive exposure within the Nigerian equities market.
Executive Summary
BUA Cement Plc delivered a remarkable financial performance for the nine months ended September 30, 2025, reflecting strong topline growth, impressive gross margin recovery, and a sharp rebound in profitability. Despite a challenging operating environment characterized by high inflation, energy cost pressures, and exchange rate volatility, BUA Cement’s strategic efficiency initiatives and operational resilience yielded robust earnings momentum. The Company reported a Profit Before Tax (PBT) of ₦338.6 billion, representing a significant +448% year-on-year increase from ₦61.8 billion in the corresponding period of 2024. Profit After Tax (PAT) also surged by 492% YoY to ₦289.9 billion, highlighting a solid recovery in net margins and operational efficiency. Revenue growth, supported by improved market penetration, price optimization, and sustained demand for cement across infrastructure and real estate sectors, underpinned the stellar performance.
Financial Highlights
₦’000 Q3 2025 Q3 2024 % Δ YoY 9M 2025 9M 2024 % Δ YoY
Revenue 278,429,739 219,462,332 +27% 858,733,667 583,405,357 +47%
Cost of Sales (134,926,362) (147,935,326) -9% (429,474,937) (402,590,984) +7%
Gross Profit 143,503,377 71,527,006 +101% 429,258,730 180,814,373 +137%
Operating Expenses (23,469,224) (15,734,738) +49% (64,893,167) (43,202,995) +50%
Operating Profit 120,236,077 55,872,575 +115% 365,624,869 137,828,677 +165%
Net Finance Cost (14,776,934) (16,296,444) -9% (46,145,382) (17,373,556) +166%
Net Exchange Gain/(Loss) 20,844,334 (17,459,187) +219% 21,627,156 (57,437,316) +138%
Profit Before Tax 123,765,019 21,626,771 +472% 338,568,185 61,754,989 +448%
Profit After Tax 108,960,049 14,716,519 +641% 289,855,280 48,970,235 +492%
EPS (Kobo) 321.75 43.46 +640% 855.93 144.61 +492%
Revenue Growth
BUA Cement recorded a strong 47% YoY revenue growth to ₦858.7 billion in 9M 2025, driven by improved plant utilization, increased production output, and a modest upward adjustment in cement prices to reflect inflationary pressures and FX depreciation.
- The 3-month (Q3 2025) revenue of ₦278.4 billion represented a 27% YoY rise, underscoring sustained demand momentum.
- Despite higher logistics and energy costs, cost of sales increased modestly by 7% YoY, demonstrating improved operational efficiency and energy sourcing optimization through alternative fuels.
- Consequently, gross profit more than doubled (+137% YoY) to ₦429.3 billion, translating to a gross margin of 50%, up significantly from 31% in the prior year, reflecting effective cost containment and enhanced production efficiency.
Profitability and Margins
- Operating profit soared by 165% YoY to ₦365.6 billion, reflecting superior production efficiency and pricing resilience.
- Operating expenses grew by 50% YoY to ₦64.9 billion, largely due to higher distribution, administrative, and energy-related costs; however, the strong revenue growth offset the impact, leading to improved operating leverage.
- The Company recorded a net finance cost of ₦46.1 billion, a 166% increase, due to higher borrowing costs and reduced finance income, though partly cushioned by a ₦21.6 billion net exchange gain compared to a ₦57.4 billion loss in 2024.
- Profit Before Tax (PBT) rose sharply by 448% to ₦338.6 billion, underscoring the remarkable improvement in core operating performance and balance sheet stability.
- After accounting for tax expenses of ₦48.7 billion, Profit After Tax (PAT) closed at ₦289.9 billion, yielding a net profit margin of 34%, up from 8% in the previous year.
This substantial profitability rebound indicates that BUA Cement has successfully transitioned from a margin-compression phase in 2024 to robust profitability expansion in 2025.
Balance Sheet Overview
₦’000 30 Sept 2025 31 Dec 2024 % Δ
Total Assets 1,633,552,202 1,570,351,865 +4%
Total Equity 608,981,596 388,548,235 +57%
Total Liabilities 1,024,570,606 1,181,803,630 -13%
Non-Current Assets 1,146,648,456 1,195,915,328 -4%
Current Assets 486,903,746 374,436,537 +30%
Cash & Short-Term Deposits 154,817,000 84,749,250 +83%
Long-Term Borrowing 409,938,331 444,824,129 -8%
Short-Term Borrowing 62,812,163 48,314,584 +30%
Retained Earnings 396,132,501 175,699,140 +125%
Interpretation:
- Total assets increased by 4% to ₦1.63 trillion, reflecting higher current assets, particularly cash reserves, trade receivables, and prepayments.
- Equity rose by 57%, driven by robust retained earnings growth from the strong 2025 profit performance, reinforcing balance sheet strength.
- Cash and short-term deposits jumped 83%, indicating improved liquidity and operational cash flow generation.
- Borrowings remained moderate, with a total debt-to-equity ratio of 0.78x, showing a stable capital structure.
- The reduction in total liabilities (-13%) further strengthens solvency and underscores efficient debt management.
Overall, BUA Cement’s balance sheet remains solid and well-capitalized, providing sufficient headroom for future capacity expansion projects and working capital efficiency.
Key Ratios
Ratio 9M 2025 9M 2024 Change
Gross Margin 50% 31% +19pp
Operating Margin 43% 24% +19pp
PBT Margin 39% 11% +28pp
Net Profit Margin 34% 8% +26pp
ROE 47% 26% +21pp
ROA 18% 8% +10pp
Debt-to-Equity Ratio 0.78x 1.52x-0.74x
Earnings Per Share (₦) 8.56 1.45 +491%
Interpretation:
- BUA Cement achieved industry-leading gross and operating margins, reflecting superior cost control and operational efficiency.
- ROE surged to 47%, highlighting efficient equity utilization and strong earnings growth.
- ROA improved to 18%, affirming improved asset productivity.
- Debt-to-equity ratio dropped significantly, reflecting a healthier balance sheet and stronger equity base.
Strategic Insights
- Operational Efficiency: Continuous investment in alternative fuel sources and improved energy management contributed significantly to cost reduction and enhanced plant efficiency.
- Market Expansion: Increased capacity utilization across plants in Sokoto and Obu continues to drive sales volume growth and market share consolidation.
- FX and Inflation Hedging: BUA effectively leveraged local sourcing of raw materials and internal logistics networks to mitigate FX exposure and supply chain disruptions.
- Digital Transformation: Enhanced automation and technology integration in operations improved production visibility, logistics coordination, and customer service delivery.
- Capital Strength: Strong retained earnings and moderate leverage position the Company to fund capacity expansions without compromising liquidity or dividend commitments.
Strengths
- Strong revenue and profit growth, supported by operational efficiency.
- Improved gross and operating margins amid cost pressures.
- Robust liquidity and cash generation capacity.
- Lower debt levels and stronger equity base.
- Sustained market leadership through efficient plant utilization and distribution networks.
Weaknesses
- Rising administrative and distribution costs due to inflation.
- Exposure to FX volatility affecting finance costs.
- Limited diversification beyond cement production in current portfolio.
Outlook
The outlook for BUA Cement Plc remains positive, with earnings momentum expected to persist through the final quarter of 2025. Sustained infrastructure spending, real estate development, and improved plant efficiency will support topline growth. Further cost-saving initiatives, debt optimization, and potential expansion projects in Northern and Southern Nigeria are expected to enhance long-term competitiveness.
However, persistent inflation, exchange rate instability, and energy cost volatility remain potential headwinds. The company’s continued investment in local raw material sourcing and renewable energy will be critical in mitigating these risks.
Analyst View
“BUA Cement Plc’s 9M 2025 results mark a significant turnaround, reflecting the company’s ability to navigate macroeconomic turbulence while enhancing profitability and efficiency. The 492% surge in post-tax profit underscores its robust operational strategy, improved cost discipline, and effective capital deployment. With stronger liquidity, reduced leverage, and expanding margins, BUA Cement is firmly positioned for sustained growth into FY2026.”
Conclusion
BUA Cement Plc has reasserted its position as one of Nigeria’s most efficient and resilient cement manufacturers. The Company’s exceptional earnings growth, solid balance sheet, and enhanced margin profile reflect strategic foresight and disciplined execution. As capacity expansions and efficiency initiatives continue, BUA Cement remains well poised to deliver sustained value creation, margin stability, and market leadership in Nigeria’s construction and infrastructure sectors.
How well do narratives help inform your perspective?
Disclaimer
The user Wane_Investment_House holds no position in NGSE:BUACEMENT. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
