Bua-Cement Displayed; Explosive Earnings Growth, Excellent Profit Margin,…

BUA CEMENT PLC (BUACEMENT) 

Quarter Under Preview: FULL YEAR 2025

Current Share Price: N247.30

Price At Released: N219.00

Latest Final Dividend: N10.00

Latest Interim Dividend:

Estimated Beta Value: 0.11x

Estimated Intrinsic Value: N170.83

Rating: Buy (Long-Term View)

The Company

BUA Cement was incorporated as a private limited liability company on 30th May 2014 and commenced operations in August 2015. The Company was re-registered as a public limited liability company on 16th May 2019. Following the successful completion of a business combination with the defunct Cement Company of Northern Nigeria Plc (“CCNN”) through a scheme of merger concluded on 23rd December 2019, the Company was listed on the Nigerian Exchange Limited on 9th January 2020. Bua-Cement operates two major cement complexes in Nigeria, Obu Plant in Edo State; about 9 million tonnes per year, and Sokoto Plant at Kalambaina; about 8 million tonnes per year. Combined capacity is roughly 17 million metric tonnes annually. Her key business strength are; large limestone depots near its plants, integrated power and logistics system, and strong demand from Nigeria’s construction and infrastructure sector.

As at the date of this report, the Company’s market capitalization stands at approximately ₦6.05 trillion. The principal activities of the Company are the manufacture, sale, and distribution of cement and related products in Nigeria and international markets.

The Released Numbers

Representing the full year 2025 business performance, the management of Bua Cement announces a Turnover figure of N1.179 trillion over the previous year Turnover of N879.469 billion. Despite the large improvement, Direct Cost of Sales figure dropped marginally to N575.263 billion from N576.212 billion announced in the corresponding year. Operating Profit is valued at NN504.554 billion against N144.294 billion, while Operating Expenses less Depreciation and Amortisation stood at N91.436 billion versus N64.920 billion in the previous year. Finance Cost is valued at N56.288 billion from N60.041 of comparable year, and The Net Finance Cost is negative N39.278 billion versus negative N41.851 billion.

Profit before Tax estimate is NN465.276 billion against N99.630 billion. Tax Expenses through the year is N109.237 billion versus N25.720 billion. Profit for the year stood at N356.038 billion, higher than the N73.909 billion of the corresponding year by 381.72%, while Total Comprehensive Income is N353.773 billion versus N71.052 billion. See the below table for details.

At the end of the 2025 business year, the Current Asset of Bua-Cement was worth N662.916 billion against N374.436 billion, while Non-Current Asset stood at N1.193 trillion, a marginal drop from the N1.195 trillion of last year, thus, Total Asset estimate is N1.856 trillion against N1.570 trillion. On the other hand, Current Liabilities at the end of the year is N697.836 billion compared to N574.554 billion of the previous year. Non-Current Liabilities is N485.391 billion versus N607.249 billion. Thus, Total Liability stood at N1.183 trillion versus N1.181 trillion of last year. Net Assets estimate is N672.899 billion against N388.548 billion, and Retained Earnings value is N462.315 billion versus N175.699 billion. See the table above for details.

Financial Strength

1. Debt Ratio: The Debt Ratio shows a decline of 15.29%, and the decline shows that Bua-Cement reduced its reliance on borrowed funds. This is a positive development, because; the company now finances more of its assets internally, its financial risk has reduced significantly, and it improves long-term solvency and resilience during economic shocks. However, 63.75% is stil relatively high, meaning debt still finances a significant portion of assets.
2. Total Debt to Equity Ratio: This ratio shows how much debt exists relative to shareholder’s fund. The drop seen from 304% to 176% is a very significant improvement. It means that, for every N1 of equity, the company previously had N3.03 debt. Now it has reduced to N1.76 per every N1 equity. This confirms; aggressive debt reduction, stronger balance sheet, and lower financial pressure from lenders. For capital-intensive industries like cement manufacturing, debt is common, but this improvement is very encouraging.
3. Equity Ratio: This is the ratio that shows the proportion of assets financed by shareholders’ fund. The rise from 24.74% to 36.25% tells us that; shareholders now finance larger portion of the company assets than before, financial stability has improved, and the company has stronger capital backing. This is a major solvency improvement.
4. Beta Value: Beta Value measures the volatility of the stock compared to the overall market. Therefore, at beta of 0.11, the stock is very stable, it moves much less that the market, and it is suitable for risk-averse investors. However, low beta stock sometimes move slowly even when the market rallies.

Overall Financial Strength Verdict: Bua Cement solvency position improved significantly in 2025, that is the company is moving toward a healthier capital structure, though debt levels remain typical for a capital-intensive cement industry, is relatively high. We therefore conclude that Bua-Cement financial strength is in an improving state.

Profitability Ratios

The profitability ratio evaluates how efficiently the company converts revenue into profit and how well it rewards shareholders.

1. EBITDA Margin: This ratios shows a growth of 159.85% and this is a very significant improvement over the year. The jump from 16.46% to 42.78% suggest; strong revenue growth, improved cost control, better operational efficiency, and possible improvement in cement pricing. Please understand that, for a cement company, a margin above 40% is extremely storng.
2. Pre-Tax Margin: This margin also revealed a jump of 247.004%, this is one of the most dramatic improvements in the report, it means that, out of every N100 revenue, Bua-Cement now keeps about N39.45 before tax, before now, it keeps N11.37. Possible factors responsible for this move are; higher cement demand, price adjustment in the market, lower production cost relative to revenue growth, and better debt cost management. This is a strong earnings recovery and expansion for Bua-Cement
3. Cost of Sales to Turnover: This ratio shows a drop in expenses to turnover to the tune of 25.81%. this is a major efficiency gain, this tells us that, in 2024, abot 66% of revenue went into production cost, but in 2025, only 49% of revenue went into cost of sales. This suggests; lower production cost relative to revenue, improved manufacturing efficiency, and better economies of scale. It is expected that, lower cost ratio directly boosts profit margins.
4. Return on Equity-ROE: This ratio shows an exceptionally strong stance, as it grows over the previous year by 178.16%. Please understand that a 52.9% ROE means that every N1 invested by shareholders generated N0.53 profit. In our opinion, anything above 20% is usually considered excellent, so 52% is outstanding.
5. Return on Assets-ROA: At 19.18% the performance on this ratio surpassed that of last year by a whooping 307.56%, this is very commendable. The improvement indicates; better asset utilization, higher productivity of plant and equipment, and strong revenue growth relative to asset base.

Overall Profitability Verdict: The above ratios shows that Bua-Cement profitability improved dramatically in 2025. We observed, massive improvement in operating margin, strong increase in pre-tax profitability, significant cost efficiency gains, and exceptional ROE and ROA growth. This suggests the company experienced a very strong earnings rebound and operational efficiency improvement.

Efficiency Ratio

1. Operating Expenses to Turnover: This ratio shows the proportion of revenue consumed by operating expenses such as administration, marketing, and distribution, plus general expenses. The slight increase of 4.66% tells us that; the company spent a little more on operating expenses activities this year relative to revenue. However, the increase is very small and still within a healthy range. Possible reasons are; expansion activities, distribution network growth, and inflation in administrative costs. But overall, the company maintains strong cost discipline.
2. Turnover to Total Assets: This ratio measures how efficiently the company uses its assets to generate revenue. The increase of 13.85% between the two compared years indicates that, assets are being untilized more productively, it also signifies that; every N1 of assets now generates N0.64 revenue, compared to N0.56 previously generated. This improvement suggests; better utilization of cement plants and equipment, higher production capacity usage, and stronger demand for cement.

Overall Efficiency Verdict: Bua-Cement demonstrates good operational efficiency; operating cost remain very well controlled, asset productivity improved significantly, and revenue generation from assets strengthened. The company appears to be scaling production efficiently while maintaining cost discipline.

1. Share price at Release Date: Records shows that the price of Bua-Cement moved from N93.00 of last year to N219 as at the time the result was made available to the investing public. Thus, the share price more than doubled within the year. This sharp increase reflects; strong investors’ confidence in the stock, significant earnings growth, and strong demand for the stock in the market arena. However, such a rapid price increase also means investors must examine valuation carefully to ensure the stock is not overpriced.
2. Earnings per Share-EPS: The Ratio shows a growth of 381.72% when compared to the previous year estimate. This is an extraordinary earnings improvement. Eps increase almost five times, meaning the company generated much higher profits for each unit of shares. As noted above, likely drivers include; higher cement sales, price increase in the market, lower cost structure, and strong operational efficiency. For investors, rising EPS directly increae shareholders’ value.
3. Total Comprehensive Income per Share: This ratio also grow by outstanding 397.90%, this reflects strong cash earnings performance per share. It also indicates that cash-generating capacity of the company improved significantly, which strengthens; dividend paying ability and financial sustainability.
4. Price Earnings Ratio-PE/Ratio: The PE/Ratio dropped significantly despite the sharp increase in share price. This means, earnings grew much faster than the stock price, it also indicates that the stock became cheaper relative to its earnings.
5. Earnings Yield: This ratio increased over the previous year by 104.57%, this increase means; investors now earn more profit relative to the share price, and the stock is offering a better value. Please note that this is a positive signal for long-term investors.
6. Book Value per Share; Though the book value is small relative to the share price, the increase of 73.18% increase over the previous year shows expansion of shareholders’ equity, it confirmed retained earnings growth, and strengthened balance sheet. This means the intrinsic value of the company is rising.
7. Price to Book Value: The ratio shows that the market values the company far above its book value. A price to book value of 10 indicates; strong investor confidence, high growth expectations, and premium market valuation. However, it also suggests the stock is not cheap relative to assets.

Overall Investment Verdict: Bua-Cement shows very strong investment fundamentals; massive EPS growth, rising book value, improved earnings yield, and lower P/E ratio despite price surge. However, price to book value indicates premium valuation, meaning the market already prices in strong future expectations.

Dividend Ratios

1. Total Dividend: The management proposed a dividend of N10.00 against the N2.05 of the previous year, this is an increase of 387.80%. The dividend increase reflects; massive profit growth, strong cash generation, and management confidence in earnings sustainability. It also shows the company is rewarding shareholders generously after a strong performance year.
2. Dividend Payout Ratio: The Ratio shows how much of earnings is paid out as dividends. A payout ratio of 95% means the company distributes almost all its profits to shareholders. This is very attractive for income investors, and it is a strong shareholders reward policy. However, very high payout leaves little retained earnings for reinvestment and expansions.
3. Dividend Yield: Dividend yield more that doubled, meaning investors now earn higher cash return relative to the share price. This makes Bua-Cement appealing to dividend investors and long-term institutional investors.
4. Sustainable Growth Rate: The improvement in this ratio means; the company can now sustain higher internal growth, and that profitability improvements support expansion potential. However, the very high payout ratio limits long-term reinvestment capacity.

Final Verdict: our Recommendation for Bua-Cement is a Buy, as we rated it a strong company. Our reasons are; explosive earnings growth, excellent profit margins, improving balance sheet, strong dividend payout, and efficient asset utilization. Please note that; key risk remains, high valuation multiples and payout ratio, these two factors could limit future flexibility if not properly attended.