In a note to the Nigerian Stock Exchange (NSE), Lafarge Africa Plc disclosed that its Board of Directors will hold an emergency meeting on 6 October to consider the company’s investment in Continental Blue Investment Ghana Limited, a cement and concrete manufacturer. The statement was signed by Adewunmi Alode, Lafarge General Counsel and Company Secretary.
The note was a surprise to many business journalists who were unaware of Lafarge’s stake in the little-known Ghanaian cement maker. In a response to questions from Arbiterz, Lafarge confirmed the 35% in Continental Blue Investment. Nigeria’s second largest cement maker by volume also said it is not planning to increase its 35% stake in the Ghanaian concrete and cement manufacture. Lafarge was non-committal about whether it is considering a divestment.
Last July, Lafarge Africa sold off its South African unit in a deal estimated to be worth $316.2 million in a bid to pay off debt of $293 million arising from a foreign currency loan.
“The approval of the proposed sale of Lafarge South Africa by the shareholders will cut debts service obligation and curtail substantially financial charges which will have a positive impact on liquidity and the opportunity to expand our operations in Nigeria,” the former Managing Director Michel Puchercos told company’s shareholders at the time.
The turnaround plan of Lafarge, mainly selling off the South African business and reducing the cost of capital, has dramatically improved the company’s financial performance.
Profit before tax surged by more than 1000% in 2019 to N17.89 billion, from N1.51 billion loss posted in 2018 and profit after tax increased by 91.64% to N15.52 billion, from N8.10 billion PAT recorded in 2018.
The Country Chief Executive Officer of Lafarge Africa Plc, Mr. Khaled El-Dokani said during a Facts Behind the Figures presentation at the Nigerian Stock Exchange on 17 September, 2020, “Our route-to-market strategy has proven to be effective, particularly, our expanded distribution network which proved very valuable during the peak of the COVID-19 pandemic lockdown. We have steadily expanded our retail footprint in our core markets. The recent re-launch of our Supaset brand has continued to gain traction with our customers, especially with the block makers”.
Nigerian BusinessPost reported that the 35% stake in Continental Blue Investment, like the disposed South African business, has not been making a positive contribution to Lafarge Africa’s financial performance. Offloading it would be welcome by investors but the company seems to be taking a long-term view of the prospects of the Ghanaian economy.