CCNN: Expect another high speed finishing

Cement Company of Northern Nigeria (CCNN) began the 2018 financial year on the high speed growth track and is expected to finish with a top record profit growth for the second year. After tax profit doubled at the end of the third quarter in September to N4 billion after rising more than one and half times in 2017.

Moderating cost amidst strong revenue growth is the high point of the company’s performance this year. Profit capacity has been enhanced by significant gains in margins. That was equally the summary of the company’s operating story in the preceding year.

The cement producing company gained a new momentum in sales revenue in 2017 that produced a top revenue growth record of 39%. It has increased that momentum so far in 2018 and has matched last year’s closing sales revenue at the end of the third quarter.

Sales revenue grew by 46% year-on-year to N19.57 billion for CCNN at the end of the third quarter. The figure is already virtually at par with the full year revenue figure of N19.59 billion in 2017. It is a further acceleration from the 39% revenue growth in 2017 – the highest turnover since the beginning of the present decade.

The company is expected to close the year with sales revenue in the region of N27 billion. This would be an increase of 38% over the sales revenue mark at the end of 2017. The company is exploiting the advantage of being in a business with firm product demand despite economic slowdown as well as ability to pass on increased costs to consumers.

Cost of sales keeps slowing down relative to sales revenue at an increase of 30% in the third quarter compared to the 46% growth in sales. The cost per unit of sales therefore declined from 62 kobo in the same period last year to 56 kobo at the end of September. That enabled the company to lift gross profit by a clear 65% year-on-year to N8.63 billion.

Selling/distribution expenses grew at the same pace with sales revenue and could not afford the company any cost saving during the review period. But this was more than countered by administrative cost – which increased by 16.7% to N1.92 billion and finance expenses – which dropped by over 74% to N29 million over the review period.

The company closed the third quarter operations with an after tax profit of N4 billion – a 97% advance year-on-year. The figure is already ahead of the full year profit in 2017.

Its profit capacity has increased from rapidly growing revenue and moderating costs. Its net profit margin has improved further from 16% at the end of 2017 to about 21% at the end of the third quarter.

The full year outlook indicates after tax profit in the region of N6 billion for CCNN in 2018. That would be an increase of 86% over the preceding year’s figure of N3.22 billion. The company had had grown after tax profit by 157% in 2017.

CCNN ended third quarter operations with earnings per share of N3.19, up from N1.62 in the same period in 2017. It earned N2.57 per share at the end of 2017 and paid out N1.25 per share to shareholders in cash dividend.