Lafarge Africa Has Better Prospects For Returns – Analysts

Capital market analysts have said that the emergence of Lafarge Africa Plc would lead to better returns and benefits for investors.

The company had announced the completion of the mandatory tender offer to minority shareholders of Ashaka Cement.
Under the terms of the tender offer, qualifying shareholders who accepted the offer were allotted 57 ordinary shares in Lafarge Africa Plc for every 202 ordinary shares in Ashaka Cem Plc tendered.
An additional cash payment of N2 per every ordinary share of AshakaCem Plc purchased by Lafarge Africa Plc during the acceptance period was also made to accepting shareholders. The acceptance period for the tender offer opened on December 10, 2014, and closed on January 23, 2015, following an extension of five working days to the offer period.
Commenting on the completion of the transaction, the chairman of Lafarge Africa Plc, Chief Olusegun Osunkeye, said, “This is a significant step in the conclusion of the consolidation process of Lafarge Africa Plc. I would like to express my appreciation to the AshakaCem shareholders whose participation in the transaction (through the tender of their shares) has made this a very successful process.”
According to the group managing director/chief executive officer (CEO) of Lafarge Africa, Mr Guillaume Roux, “We are delighted to have received a great response from AshakaCem Plc shareholders and will continue to work towards maximising shareholder value.”
Market analysts said that the decision of Lafarge to consolidate its Nigerian and South African businesses under a single entity was a synergistic strategic move that could change the game plan in the Nigerian investment market, the cement industry and African mergers and acquisitions industry.
The managing director of Highcap Securities Limited, Mr David Adonri, said, “Going forward, we expect to see significant increase in returns in terms of dividend declaration, share price appreciation coupled with renewed interest by portfolio managers, both domestic and foreign as they continue to further tilt their investment decisions in favour of the company due to anticipated returns.”
He added that the global cement outlook for the African market provides a strong support base for the realisation of the immediate and long-term gains from the Lafarge Africa transaction. The company released its audited result for the period ended December 31, 2014, showed a revenue of N205.84 billion from N206.07 billion in 2013. Cost of sales declined by one per cent to N137.4 billion from N138.75 billion in 2013. Its profit after tax fell by 43 per cent to N34.66 billion from N60.32 billion the previous year and there was also a 1,072 basis points jump in tax rate to N6.5 billion.
The company’s earnings were adversely impacted by other operating losses of N1.6 billion from N21.5 billion in 2013 and a net loss from associates amounting to N2.4 billion. The board has proposed a final dividend of N3.60 higher than N3.30 paid in 2013, with a dividend yield of 4.04 per cent on the share price of N89 at which it closed market on March 13, 2015.
Commenting on the result, Osunkeye said, “it is with pleasure that we publish the first audited results of our newly transformed company. The good performance even in a volatile market affirms the strength of our new Company and our commitment to achieving excellence.”
In the same vein, Roux said, “our company has shown impressive performance; our business combination plans have been well executed within set timelines. We are committed to improving operational performance by leveraging on opportunities this presents to us to deliver sustainable returns to our shareholders.”