Lafarge Africa Earns Our Strong Hold/Buy on Dip Rating

LAFARGE AFRICA PLC (WAPCO)

Quarter Under Preview: FULL YEAR 2025

Current Share Price: N213.90

Price At Released: N190.00

Latest Final Dividend: N6.00

Latest Interim Dividend: N4.00

Estimated Beta Value: -0.01x

Estimated Intrinsic Value: N183.35

Rating: Buy Hold/Buy on Dip

The Company

The company now originally known as West African Portland Cement (WAPCO), the company was established in 1959, with one of its earliest plants in Ewekoro, Ogun State Nigeria. The name changed to Lafarge Africa in 2014 after restructuring and expansion. The company merged Nigerian operations with other assets, acquired United Cement Company of Nigeria (UNICEM), Ashaka Cement, Atlas Cement, and Lafarge Africa operations, thus, the new name Africa reflects a Pan-African ambition, not just Nigeria, and it also reflects a larger, consolidated cement group.

Lafarge Africa is one of the major cement manufacturing companies in Nigeria, producing cement, aggregates, and ready-mix concrete used in construction works.  It is listed on the Nigerian Exchange under the ticker Wapco. Its popular products includes Elephant Cement, Supaset, PowerMax, and Ashaka Cement.

The Released Numbers

At the end of the 2025 business session, the management of Lafarge Africa released an impressive numbers, where it builds its Turnover figure by 53.04%, standing at N1.066 trillion from N696.757 billion in the previous year. Direct Cost of Sales was valued at N448.936 billion against N350.047 billion in the corresponding quarter, while Operating Profit was estimated at N392.099 billion versus N193.005. Operating Expenses increased to N229.506 billion against N160.569 billion. Finance Cost through the year was valued at N11.006 billion, lower than the N42.547 billion of last year, meanwhile the Net Finance Cost is positive N19.216 billion as against the negative net of N40.486 billion in 2024. Profit before Tax stood at N411.316 billion against N152.264 billion, while Tax Expenses is more than doubled at N138.196 billion versus N52.119 billion, and Profit for the year stood at N273.120 billion,  a growth of 172.2% over the N100.145 billion achieved in 2024 financial year. See the below table for details.

At the end of the year, Lafarge Africa Current Assets is valued at N559.502 billion from N152.264 billion in the comparable year. Non-Current Assets estimate is N648.521 billion against N576.506 billion, thus, Total Assets for the year is N1.208 trillion versus N990.509 billion in the corresponding year. Current Liabilities on the other hand is N417.362 billion against N408.845 billion, while Non-Current Liabilities stood at N96.666 billion as against N77.023 billion, in other words, Total Liability for the year is N514.028 billion compared to N485.867 in the similar year. Net Assets is valued at 693.995 billion, while Retained Earnings improved by 60% to stand at the current N504.922 billion. See the above table for details.

Financial Strength

1. Debt Ratios: The Debt Ratio dropped from 49.05% to 42.55%, in our opinion, this is a significant decline. This means that, the company is now financing less of its assets with debt, moving below 50% is psychologically and structurally important. It indicates a reduced financial rist, and stronger balance sheet resilience.
2. Debt-to-Equity Ratio: This ratio also shows a major change, by moving from 96.28% to 74.07%, this major improvement can be interpreted as the company is now previously close to 1:1 leverage, and this is aggressive. It can also be said that the company is now at 0.74:1 which is moderate and healthy. Please understand that this is a big deal, because of lower exposure to interest rate shock, and better capacity to raise future financing if needed.
3. Equity Ratio: The ratio equally revealed a strong increase, showing that; a more than half of assets is now funded by equity, this is a very strong solvency position. Please note that it signals, strong retained earnings growth, and increased shareholders value backing the business.

Overall Financial Strength Verdict: Now this is it, deleveraging is clearly in progress, equity base is strengthening, and financial risk is dropping significantly. This confirms that, the profit growth is not just accounting, it is being used to reduce debt, and strengthen the balance sheet.

Profitability Ratio

1. EBITDA Margin: The ratio moved to 36.77% from N27.70%, a positive change of 32.75%. This indicates a massive improvement in core operating efficiency, cement companies are strong when above 30%. We can therefore say that, there is a better cost control in the energy, distribution, and production session of the business. Also we can conclude that there is ongoing a strong pricing power, as prices of cement had maintained an upward turn due to the volatility in the nation’s economy and world economy at larger.
2. Pre-Tax Margin: This ratio shows an extraordinary expansion as it moved fro N21.85% to the current 38.57%. This confirms that not just operations is improving, financial cost reduction is a major driver.
3. Cost of Sales to Turnover: Here we observe a strong decline, as it moved to 42.10% from 50.24%. This can be explain as; Cost of production has dropped significantly relative to revenue. This is a powerful signal, as it portend; improved production efficiency, and possibly better energy mix versus cost management.
4. Return on Equity (ROE): The 98.31% improvement is a top-tier performance, please understand that anything above 25% is excellent, and 40% is near elite level.
5. Return on Assets: Here we also saw a growth of 123.62%, this shows that Assets are now generating more than double the returns, it also implies an improved assets utilization, and strong operational efficiency.

Overall Profitability Verdict: The profitability ratios shows a stand out point in, margin expansion across all levels, cost efficiency improved significantly, finance cost reduction amplified profits, and returns (ROE, & ROA) are exceptionally high.

Efficiency Ratios

1. Operating Expenses to Turnover: The ratio declined by 6.60% having moved to 21.52% from 23.05%. We can therefore interpret this move as; operating expenses are declining relative to revenue. In our opinion, this is very positive, as it defends that cost discipline is improving, scale advantage is kicking in, and management is controlling overheads effectively.
2. Turnover to Total Assets: The Company is generating more revenue per unit assets, this is a signal of efficiency improvement. It confirms better utilization of plants and equipment, and higher production throughout or better sales conversion.

Final Efficiency Verdict: What we have seen here is not just inflation driven performance, it is a cost efficiency move, which yielded intentional Asset productivity results. The combination of these two drives sustainable margin expansion.

Investment Ratios

1. Price Movement: Within the two financial years compared, the price moved from N75 to N190 (153%). The market has already reacted strongly to the turnaround seen above. A lot of the good news is already priced into the share price.
2. Earnings per Share (EPS): This also achieved a whopping 173% growth as it moved from N6.22 to N16.96. This means earnings growth is even stronger than price growth. This is a key performance, the rally is fundamentally justified, not just a speculation.
3. P/E-Ratio: Despite the jumping in price, P/E declined slightly, meaning that, earnings growth has kept valuation reasonable, and the stock is not overvalued on earnings basis.
4. Earnings Yields: At 8.92% we can conclude a solid return to price, the stock is relatively attractive compared to other Nigerian equities.
5. Book Value per Share: The book value is now estimated at N43.08 from N31.33, this can be interpreted as; strong growth in intrinsic value, backed by retained earnings and balance sheet strength. Though the intrinsic value will still stay below the current market price, the price is still very much justified and valid for onward improvement of financial performance over the coming years.
6. Price-to-Book Ratio: This reflects our assertion above, the ratio now stands at N4.41 from N2.39. This is where caution comes in, a PBV is high, it means the market is pricing in future growth expectations, at the current market price, the stock is no longer cheap on asset basis.

Verdict: The stock is now cheap on earnings basis, but expensive on assets side. The combination of these typically means; a high quality company, but longer bargain.

Dividend Analysis

Total Dividend grew by over 400% from N1.20 to N6.00, this is massive, This is a step change in dividend policy. The Pay-out-Ratio is now 35.39% compared to the 19.30% of last year, this means the company is sharing more earnings with shareholders now. This is still within the healthy range, it is not over paying, and still rating earnings for growth. The dividend yield of almost 3.16% against 1.60% shows that yield has almost doubled, thus, the company had moved from a low yield stock to moderate yield stock.

Final Verdict: We rate the stock Strong Hold, and recommend a Buy on Dip approach of investments. The performance revealed a quality stock; balance sheet is strong, profitability is elite, Efficiency is improving, and dividend is growing rapidly.