Lafarge Africa 2024 Results: Profit Soars by Nearly 100%, But Shareholders Get Dividend Cut

Lafarge Africa Plc has posted impressive results for the financial year ended December 31, 2024, with profit after tax rising by nearly 100% year-on-year. According to the company’s financial statement, profit after tax jumped to ₦100.16 billion, up from ₦51.14 billion recorded in 2023.

Despite the strong bottom line performance, shareholders were left with a bitter taste as Lafarge slashed its dividend payout. The company announced a dividend of 120 kobo per share, down from 190 kobo per share declared for the previous year — a sharp cut of 70 kobo.

Key Numbers at a Glance

• Revenue: ₦495.65 billion (up from ₦405.47 billion in 2023)
• Gross Profit: ₦179.78 billion (up from ₦136.56 billion)
• Profit Before Tax: ₦146.88 billion (up from ₦77.39 billion)
• Profit After Tax: ₦100.16 billion (up from ₦51.14 billion)
• Dividend Per Share: 120 kobo (down from 190 kobo)

What’s Driving the Numbers?

The sharp rise in profit can be attributed to increased revenues and cost management, although the financial statement offered limited insight into production volumes or market dynamics. Lafarge’s reluctance to provide granular operational data could stem from competitive concerns, particularly in a cement industry dominated by rivals with greater capacity and market share.

Shareholder Disappointment

While the strong profit would typically translate into higher dividends, the cut to 120 kobo per share signals a more cautious approach to cash preservation. Some analysts believe the reduced payout could indicate plans for increased capital expenditure or debt servicing, especially with Nigeria’s challenging macroeconomic environment.

Dr. Yinka Hammed, Contributing Editor at Arbiterz commented, “This is a classic case of good financial performance not translating into immediate rewards for shareholders”. The reduced dividend could reflect a prudent strategy given Nigeria’s inflationary pressures and the need to preserve liquidity for future investments.”

Outlook and Strategic Implications of Huaxin’s Takeover

Lafarge Africa’s 2024 financial performance presents a mixed picture for investors. On one hand, the company delivered a near-100% jump in profit after tax, demonstrating strong operational gains and effective cost management. On the other hand, the sharp reduction in dividend payout to 120 kobo per share from 190 kobo has left shareholders with less to cheer about.

A critical development shaping Lafarge Africa’s future is the acquisition by Huaxin Cement — a leading Chinese cement manufacturer — of Holcim’s majority stake in Lafarge Africa’s parent company, Lafarge Holcim Group. This transaction, completed in late 2024, effectively means Huaxin will control Lafarge Africa once Nigerian authorities approve the $1 billion transaction.

The change in ownership will mark a pivotal shift in Lafarge Africa’s strategic direction. Huaxin is known for its cost-efficient production processes, aggressive technology deployment, and experience in emerging markets across Asia and Africa. Analysts believe Huaxin’s playbook will likely focus on:

• Operational efficiency: Expect Lafarge Africa to streamline costs even further, possibly through automation and supply chain optimization.
• Capacity expansion: Huaxin’s history suggests a strong appetite for growth, which could mean new investments to boost Lafarge’s production capacity in Nigeria.
• Price competition: With Huaxin at the helm, Lafarge Africa may adopt more aggressive pricing strategies to grab market share from the market leaders, Dangote Cement and BUA Cement.
• Market diversification: Beyond Nigeria, Huaxin could push Lafarge Africa to explore more regional exports, aligning with China’s broader strategy of deepening trade ties with African markets.

Investor Signals

The reduced dividend could also be linked to the transition — Huaxin may be conserving cash to fund future expansion plans or to settle some financial obligations linked to the takeover. For long-term investors, this could be a signal of growth ambitions, while short-term, dividend-focused shareholders may need to adjust expectations.

Overall, Huaxin’s entry may introduce a bold, high-growth mindset into Lafarge Africa, shifting the focus from stability and steady dividends to aggressive competition and expansion in West Africa’s cement market.

 

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