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Lafarge expresses growth optimism under forex reforms

By Benjaim Alade
13 July 2016   |   3:09 am
Lafarge Africa Plc has expressed optimism of a positive outlook following the unveiling of new foreign exchange reforms by the Central Bank of Nigeria (CBN).
 Lafarge

Lafarge

Lafarge Africa Plc has expressed optimism of a positive outlook following the unveiling of new foreign exchange reforms by the Central Bank of Nigeria (CBN).

The firm unveiled an analysis of its second quarter 2016 performance to the Nigerian stock exchange. According to the analysis, the major variable is the recent foreign exchange reforms put in place by the Central Bank of Nigeria recently which will lead to higher cost of servicing foreign exchange loans in the short term but in the long term allow a refinancing of external loans and thus significant interest payment savings.

In a profit update of the company based on unaudited financial statements for the period ended 30th June 2016, made available to the Nigerian Stock Exchange (NSE), Lafarge said the adjustment in the value of the naira against the USD will not affect the manufacturer’s immediate cash flow.

The company sees the naira adjustment as a one-time occurrence, which will lead to future benefits.Lafarge has a total of $495 million in external borrowing on its book which are debts contracted by Unicem, one of its operating companies which it acquired 100 per cent stakes in 2015.Prior to the completion of the LafargeHolcim merger in 2015, Lafarge Africa’s stake in UNICEM was only 53 per cent.

In a sign of confidence in Unicem’s operations, Nigerian lenders last month bought into a N60 billion naira bond issuance by Lafarge Africa PLC to refinance the naira component of UNICEM’s debt. This was the largest corporate bond issuance in Nigeria.

According to Lafarge Africa, the CBN’s reform of the interbank foreign exchange which has boosted foreign lenders confidence about the Nigerian market provides an opportunity for Lafarge Africa to conclude refinancing the Dollar denominated component of Unicem’s debt by the end of 2016, thus making significant savings in interest payment.

Lafarge Africa Plc maintained that it was very positive about the future outlook for Unicem, which is strategically located in Mfamosing, Calabar, in Cross Rivers State and is a major cement plant in the South-South and South-East Region of Nigeria.

According to Lafarge, the plant has a cement capacity of 2.5mm tonnes with the foreseen commissioning of a 2.5m tonnes line during the second half of 2016, which will double Unicem’s capacity.

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