CCNN Grows 9-Month Net Profit By 96.94%, Despite Huge Tax Expense Rise

The board of Cement Company of Northern Nigeria (CCNN), a member of the BUA Group, finally released its unaudited financials for the nine-month ended September 30, 2018, showing double digit growth across most of the parameters, even as profit before tax climbed 100.48%; while 109.26% increase in tax expenses left net profit growth at 96.94%.
Details of the result show that revenue for the period rose by N5.943bn or 43.62% to N19.571bn, derived from sale of cement, compared to N13.628bn in the corresponding period of 2017; while cost of sales jumped from N8.402bn to N10.941bn, the bulk of which was the N7.053bn energy cost, as well as the N2.031bn spent on purchase of clinker. This represented a rise of N2.539bn, or 43.62%, following which gross profit climbed N3.403bn or 65.14% up from N5.225bn in 2017, to N8.629bn.
Other income declined by N28.284m or 62.08% from N45.558m to N17.273m, comprising N3.382m insurance claims, sundry income amounting to N7.076m profit from disposal of assets, compared to a N39.69m loss reported for the year ended December 2017; and N2.645m in interest income, as against N66.119m in December 2017.
Selling and distribution costs rose by N312.465m or 47.87% from N652.749m to N965.215m, made up of N28.123m marketing expenses and other overheads; N760.266m distribution costs; and N176.824m paid as salaries, wages and benefits.
Administrative expenses increased by N275.732m, or 16.72% from N1.648bn in the corresponding nine months of 2017 to N1.924bn.
The management also successful cut finance costs by N83.844m or 74.42%, arising from the N41.758m interest on loans and N30.84m of bank charges; compared to N112.66m in the corresponding period of last year, to N28.816m; resulting in a N2.871bn or 100.48% PBT growth within the period to N5.728bn, compared to the previous N2.857bn.
Tax expenses for the period increased by N897.433m, or 109.26% from N821.406m in 2017 to N1.718bn; leaving net profit at N4.01bn, representing a N1.973bn or 96.94% from N2.046bn in 2017. The PAT translated to Earnings Per Share of N3.19, up from N1.62 in the prior third quarter.
Shareholders of CCNN, last month at a court-ordered Extra-Ordinary General Meetings in Sokoto, gave their blessings unanimously for its merger with sister company- Kalambaina Cement Company Limited a private limited liability company and wholly owned subsidiary of BUA Cement Limited, incorporated in Nigeria, pending final regulatory approval.
Kalambaina, with brand new 1.5 million metric tonnes per annum cement production plant situated in Kalambaina, Sokoto State, is primarily engaged in the business of quarrying, extracting, processing and dealing in limestone as well as the manufacture and supply of cement.
A joint statement by the companies said the merger deal will bring total installed capacity of the emergent CCNN to two million metric tonnes of cement, making BUA Group Nigeria’s second largest producer of cement by volume by the end of next year.
Speaking on the merger deal, AbdulSamad Rabiu, Chairman, Cement Company of Northern Nigeria and Founder, BUA Group, expressed appreciation to “shareholders of both companies who voted overwhelmingly to approve this merger.”
The deal, he continued, “signposts shareholder confidence in the value proposition of the CCNN-Kalambaina Merger and we are certain that the new entity can compete effectively in the cement industry in Nigeria whilst maintaining its market dominance in this region. The new, enlarged CCNN is a stronger platform to capture significant synergies and create value for the benefit of the shareholders in the form of stronger competitive position, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue.”