BUA Cement Plc has stated that a significant decline in commodity prices, driven by improvements in the naira exchange rate and decision to generate its own electricity to power production plants would reduce prices of its cement product in the market.
Abdul Samad Rabiu, Chairman, Board of Directors, BUA Group Plc, at the company’s 9th Annual General Meeting, attributed the sustained hike in the price of a bag of cement to the devaluation of the Naira, hoping that the local currency would soon gain strength against the dollar as the Nigerian economy improves, reports Daily Independent.
“We are reaching an exchange rate of $1,500 to the dollar. I’m optimistic that going forward, we’ll see the naira possibly appreciate to N1,200 or even below. When that happens, prices will come down, not just for cement, but for other commodities too,” Rabiu said
Responding to questions about the current N10,000 per bag retail price of cement, Rabiu said the figure reflects production realities rather than profiteering.
“It is the cost of production that has kept the price at around N10,000,” he stated.
“We have invested billions of dollars in BUA Cement over 20 to 30 years. A return of N69 billion profit after tax which translates to about $40 million — on such a large investment is not excessive.”
He pointed out that energy remains the single largest cost driver for the company, prompting BUA Cement to invest in a mini liquefied natural gas (LNG) facility. The facility is expected to reduce energy costs across its plants and bolster operational efficiency. “There’s a lot of money going into gas,” Rabiu said. “We want to manage that cost internally to the extent possible.”
The company delivered a good financial performance in 2024 despite macroeconomic headwinds, including further depreciation of the naira and rising input costs.
Revenue rose by 90.5 percent to N876.5 billion, up from N460 billion in 2023. Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased to N268.6 billion, a 43.8 percent rise from the previous year’s N186.8 billion.
Themed: “Beyond Limits,” the Annual Report & Accounts 2024 report of BUA Cement indicates a strong revenue performance for BUA Cement in 2024, driven by increased production capacity and strong market demand.
Shareholders of the company unanimously approved the proposed dividend of N2.05 per ordinary share at the AGM that was held at Transcorp Hilton in Abuja.
BUA had entered into power generation agreements, including a 70MW deal with Wartsila OY of Finland for the BUA Cement Sokoto Line 4, and a 20MW agreement with Green Power International for a gas-based power plant.
The firm said the agreements were part of its strategy to boost cement production capacity and ensure efficient power supply for its operations.
The company also faced challenges related to currency fluctuations and increased borrowing costs.
