Update shared on 02 Nov 2025
Fair value Increased 30%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.
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.