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This report provides a detailed overview of Lafarge Africa Plc. performance during the first half of 2023 (H1:2023).

H1:2023 financial statement for Lafarge Africa Plc. revealed a 5.95% YoY growth in revenue to NGN197.68bn. On the other hand, production cost of sales (adjusted for depreciation) rose marginally by 2.94% YoY to NGN81.02bn while total operating costs (ex-dep) advanced 9.76% YoY to NGN51.14bn. Despite the surge in finance income (+2,215.32% YoY to NGN4.44bn) and consequently, improvement in Profit Before Tax (PBT), Profit After Tax (PAT) declined by 5.16% YoY to NGN35.48bn. We associate the decline to higher effective tax rate (+109.50% YoY to NGN35.48bn) due to the expiration of the Pioneer Status Incentive (PSI).  Overall, net profit margin deteriorated to 17.95% YoY in H1:2023 (vs. 20.05% YoY in H1:2022).

Considering the company’s performance amid macroeconomic headwinds, our outlook for Lafarge Africa Plc remains positive. We based this on the expectation of an improved topline performance amid Management’s cost-saving strategies. We also recognize the company’s strong balance sheet position with free cash flow growing by 119% to NGN81.8bn in H1:2023. We maintain our 2023FY target price of NGN45.01.

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