Wapco

[emmanuel ewumi]

Originally Posted by zainabusman

I was just looking at WAPCO accounts yesterday and i noticed that the tax holiday they are enjoying on their Ewokoro plant will expire this August. So we should take that into account in any analysis. They will pay more tax in 2008 compared to 2007.

l have my reservations on the economic policy of this government,l believe it is anti manufacturers.the government gave licenses to traders to import cement into the country.l invested heavily in Dunlop because of the ban on Radial tyres.the government just lifted the ban and also reduced the import duties.This has led to retrenchment in Dunlop.
l just hope there will not be a policy reversal in the case of WAPCO,and if there is any l believe they have a dynamic management.l have some units of WAPCO and hopes to increase my holdings.

[zainabusman]

Originally Posted by emmanuel ewumi

l have my reservations on the economic policy of this government,l believe it is anti manufacturers.the government gave licenses to traders to import cement into the country.l invested heavily in Dunlop because of the ban on Radial tyres.the government just lifted the ban and also reduced the import duties.This has led to retrenchment in Dunlop.
l just hope there will not be a policy reversal in the case of WAPCO,and if there is any l believe they have a dynamic management.l have some units of WAPCO and hopes to increase my holdings.

As u might be aware they have already given licenses for cement importation which is the opposite of OBJ policy of banning cement import.

I completely agree with u that this govt is anti manufacturers.

The likes of WAPCO, Dangote, Flour mills invested billions to comply with OBJ policy of banning cement import only for Yar'Adua to change the policy. How can we move forward when we encourage imports to the detriment of local products and jobs?

The level of unemployent is alarming. Some job applicants recently lost their lives in Immigration eployment screening. Meanwhile this govt is exporting jobs. Hmm.

[Michael]

Originally Posted by zainabusman

As u might be aware they have already given licenses for cement importation which is the opposite of OBJ policy of banning cement import.

I completely agree with u that this govt is anti manufacturers.

The likes of WAPCO, Dangote, Flour mills invested billions to comply with OBJ policy of banning cement import only for Yar'Adua to change the policy. How can we move forward when we encourage imports to the detriment of local products and jobs?

The level of unemployent is alarming. Some job applicants recently lost their lives in Immigration eployment screening. Meanwhile this govt is exporting jobs. Hmm.

This is an emergency we cannot produce enough, at current prices of cement how many people are buying. I know Jobs are lost by the closure of manufacturing concerns, but they are also created in sales. I think this is a state of emergency in Infrastructural development which cannot be achieved by local supply of cement, If you have better information to convince me that we can produce enough for our local consumption, then I will back you 100%.

[hispy99]

Originally Posted by Michael

This is an emergency we cannot produce enough, at current prices of cement how many people are buying. I know Jobs are lost by the closure of manufacturing concerns, but they are also created in sales. I think this is a state of emergency in Infrastructural development which cannot be achieved by local supply of cement, If you have better information to convince me that we can produce enough for our local consumption, then I will back you 100%.

If they are given import licnces to import the shorfall in local production, then I don't mind. If they are given licences to import at will, then there is a problem.

[waaan5]

The local shortfall in cement production argument was a ploy to open up the flood gates of cement importation. It is such a shame. It has been always 'one-step forward, two steps backwards'. If there is anything this country has competitive advantage in production, it should be cement. So the 'shortfall argument' is such a distraction. The key thing here is 'policy summersaults'. If the policy was to increase local production, then you better stick to a ban otherwise, no business man will try to increase local capacity when he can easily import. I do appreciate the pains of those needing cement and seeing the price sky rocket. But it has to get hard before it gets better. And investors were already angling for the margin in in-country cement production before the cabal fronted by Ibeto/Ugwu threw spanners in the works. WHy give license? Why not just allow open imports if the aim is simply to crash prices? That could have been more effective. And experience has shown that traders will always aim to maximise profit. So the expected crash in prices may not result from given import license.

[riskreturn]

LAFARGE CEMENT (WAPCO) PLC
UNAUDITED HALF YEAR RESULT FOR THE PERIOD ENDED JUNE 30,2008
2008 2007
TURNOVER N22.158b N19.887b
PROFIT BEFORE TAXATION N5.612b N6.833b
TAXATION (N865m) (N1.014b)
PROFIT AFTER TAXATION N4.747b N5.819b

[zainabusman]

Originally Posted by riskreturn

LAFARGE CEMENT (WAPCO) PLC
UNAUDITED HALF YEAR RESULT FOR THE PERIOD ENDED JUNE 30,2008
2008 2007
TURNOVER N22.158b N19.887b
PROFIT BEFORE TAXATION N5.612b N6.833b
TAXATION (N865m) (N1.014b)
PROFIT AFTER TAXATION N4.747b N5.819b

A drop in profitability. I wonder what is causing this drop. Turnover has increased so i guess it must be a higher growth in expenses. Hmm.

Also we should take into account a higher tax rate for the last qtr of the year as the waiver on Ewekoro expires Aug 2008.

I am forecasting an EPS of N2.9 after applying a 28% tax rate on revenues in the second half of the year. At a price of N43 this will give a PE of 14.8. Not bad but not great either.

[Catweasel]

As a relative newby I am certainly no expert; however, that does not mean I do not have my own thoughts on these results and the potential of the company going forward.

The Q2 results report an 18% drop in profits compared with the same period 2007. If we look back at the Q1 results they were reporting a 26% drop in profits against the same period. To my mind this does show a degree of recovery since the first quarter.

The company reported that production was down in Q1 due to a shortage of heavy gas, also increased costs due to increased diesel costs.

Additionally, WAPCO among others, have been given licence to supply imported bagged cement from 1st August. Being part of the Lafarge group (the worlds biggest cement manufacturer) I can only assume their ability to achieve significant quantities of finished product at competitive rates in comparison with the other licenced import suppliers.

When i add to that the commitment by Negris to establish a reliable power supply at Ewekoro along with the commitment of WAPCO and parent Company Lafarge to increase their indiginous production, I can only see the company doing well in the future.

My own humble considerations leave me thinking that WAPCO is currently underpriced, bearing in mind it also owns significant assets and in the medium to long term (12 to 36 months) has the potential to become a giant on the NSE.

Having said all of that I would be open and look forward to the thoughts and opinions of some of the more educated in the Nigerian world of business regarding my simple assumptions

[Catweasel]

.... and notwithstanding any of the above ... those nice people at WAPCO do indeed have a fabulous golf course.

[billions]

Originally Posted by Catweasel

As a relative newby I am certainly no expert; however, that does not mean I do not have my own thoughts on these results and the potential of the company going forward.

The Q2 results report an 18% drop in profits compared with the same period 2007. If we look back at the Q1 results they were reporting a 26% drop in profits against the same period. To my mind this does show a degree of recovery since the first quarter.

The company reported that production was down in Q1 due to a shortage of heavy gas, also increased costs due to increased diesel costs.

Additionally, WAPCO among others, have been given licence to supply imported bagged cement from 1st August. Being part of the Lafarge group (the worlds biggest cement manufacturer) I can only assume their ability to achieve significant quantities of finished product at competitive rates in comparison with the other licenced import suppliers.

When i add to that the commitment by Negris to establish a reliable power supply at Ewekoro along with the commitment of WAPCO and parent Company Lafarge to increase their indiginous production, I can only see the company doing well in the future.

My own humble considerations leave me thinking that WAPCO is currently underpriced, bearing in mind it also owns significant assets and in the medium to long term (12 to 36 months) has the potential to become a giant on the NSE.

Having said all of that I would be open and look forward to the thoughts and opinions of some of the more educated in the Nigerian world of business regarding my simple assumptions

I also believe that d company will do well.

It is cool at the current price...i hv a forward PE of 13.6(if d profit of the company shd drop by 11.4%).

[balaliyu]

I actually think that the Government and a lot of other folks are too optimistic about the impact of importation on the price of domestic cement. Truth is that cement is not cheap in most parts of the world right now...

Im currently visiting Doha, and while the official Government price is about N500, the black market price for the 50kg bag is about ~N1800..and this is country with no bereaucracy, 24hr power and efficient shipping ports..

Why is this so..?All the Gulf states, UAE, Bahrain, Qatar etc...are currently expanding...look up the internet, using their oil wealth to build whole new cities in the deserts..their thinking is that the future may largely be driven by tourism...Infact it is rumored that half the Construction cranes are in the Gulf region right now... Also China is not taking a breather yet..so world demand for cement is at an all time high...

For the manufacturing companies in Nigeria, the Power scenario is unfortunate, and indeed an embarrassment for all Nigerians. But overall, im still really skeptical..and will wait to see how much cheaper these companies will be able to land cement in Nigeria.....

Cheers...B

[Taipan]

Originally Posted by billions

I also believe that d company will do well.

It is cool at the current price...i hv a forward PE of 13.6(if d profit of the company shd drop by 11.4%).

While I do want WAPCO to do well, I fear that you guys are being a bit to optimistic or underestimating the issue of power and infrastructure in the country right now.
Dont know if you have noticed, but WAPCO isnt the only manufacturing company having problems. Flour Mills has also had a drastic decline in profitability (N6.4b in 2007 as opposed to N7.4b in 2006), Dunlop has closed its brand new factory doors, PZ's profit growth has reduced, and other unlisted companies have either shut-down or are screaming. (With FMN, I took a beating by being too optimistic i.e. hoping that their fortunes would increase after the half year results came out. I do not intend for that to happen again.) And now, NGC is planning to triple the price of gas. TRIPLE! See Proshare News , I believe it will throw a lot of light. I am presently awaiting DSR's result with trepidation as I sort of take them as the final authority in manufacturing.
As you said, I agree that at its current price, WAPCO looks quite ok but if the current trend continues, one will quickly find that the cheap price was just an illusion. I like to see myself as a risktaker, but sometimes when somethings become so evident, I think it pays to err on the side of caution.

[billions]

Originally Posted by Taipan

While I do want WAPCO to do well, I fear that you guys are being a bit to optimistic or underestimating the issue of power and infrastructure in the country right now.
Dont know if you have noticed, but WAPCO isnt the only manufacturing company having problems. Flour Mills has also had a drastic decline in profitability (N6.4b in 2007 as opposed to N7.4b in 2006), Dunlop has closed its brand new factory doors, PZ's profit growth has reduced, and other unlisted companies have either shut-down or are screaming. (With FMN, I took a beating by being too optimistic i.e. hoping that their fortunes would increase after the half year results came out. I do not intend for that to happen again.) And now, NGC is planning to triple the price of gas. TRIPLE! See Proshare News , I believe it will throw a lot of light. I am presently awaiting DSR's result with trepidation as I sort of take them as the final authority in manufacturing.
As you said, I agree that at its current price, WAPCO looks quite ok but if the current trend continues, one will quickly find that the cheap price was just an illusion. I like to see myself as a risktaker, but sometimes when somethings become so evident, I think it pays to err on the side of caution.

I agree with you...power is d greatest problem for naija manufacturers.

Hopefully,Negris shd be able to promptly sort out d power problem at d Ewekoro plant as pointed out by catweasel.D only problem with dis is dat its gonna be gas fired....and price of gas is moving north.

[solainvest]

LafargeWAPCO Plans $550mn Expansion Programme

LafargeWAPCO Plans $550mn Expansion Programme | Financialnigeria.com

To enhance its productive capacity, LafargeWAPCO Plc, a manufacturing company quoted on the Nigerian Stock Exchange, has concluded plans to expand its operations with 360 million Euro, about $550 million.

The fresh fund, according to the company's Managing Director, Mr. George Lourandos would come in two tranches of dollar and naira and would be syndinated by some Nigerian banks especially those foreign affiliations.

Specifically, he said the company is considering the installation of new power plants for both the existing and new Ewekoro lines, while plans are also underway to make the Ewekoro plant a dual fired one.

His words: "As a leading manufacturing of cement in Nigeria, LafargeWAPCO continues to ensure that relevant investment are made or up-to-date maintenance and refurbishment of our equipment's in Ewekoro and Sagamu for optimisation of output from the two plants.

"We are considering the installation of new power plants for both the existing and new Ewekoro line and fired one. These initiatives are aimed at reducing the negative impact of epileptic power and gas supply".

He continued: " LafargeWAPCO will witness an increase in its capacity with its on-going expansion project. Recent decision has been taken to deploy by end of 2010, a new 2.2 million metric tonnes line, which will increase the aggregate LafargeWAPCO capacity to 4.2 million metric tonnes. LafargeWAPCO currently has a capacity of 2.0 million metre tonnes through its two plants of Ewkoro and Sagamu.

To this end, we have signed a contract with CBM Construction Company of China for the supply of equipment and subsequent erection in Ewkoro. We have equally signed an agreement with Wartizila of Finland for a new power plant".

At the briefing held in the company yesterday, the General Manager, Finance, Mr. Emmanuel Olorintoki presented the company's six months results.

By the results, after tax profit fall from N5.8 billion in the half year ended June 30, 2007 to N4.75 billion in 2008, on a turnover, which rose from N19.9 billion to N22.2 billion.

Lourandos explained that although the operations of the company in the past six months were affected by the prevailing power and gas supply situation in the country, LafargeWAPCO is gearing for greater heights in the months ahead.

According to him, cement sales volume achieved for the half year was 847,200 metric tonnes, down on corresponding period of 2007 by about nine per cent as a result of power supply disruptions to the plants in Ewkoro and Sagamu.

"Operating profit was adversely impacted on increased cost of sales due to the use of imported clinker, the cost of which is higher than the cost of own-manufacture," Lourandos said.

[billions]

Lafarge WAPCO Assures On Environmental Safety
The Management of Lafarge Cement WAPCO Nigeria Plc, a leading cement manufacturer, has explained that its proposed new plant project will comply with both Nigeria and international standard in terms of its impact on the environment.

The company disclosed this in Abeokuta during an Environmental Impact Assessment (EIA)review meeting conducted by the Federal Ministry of Environment, Housing and Urban Development.

Lafarge WAPCO's Sustainability Development Manager, Mr. Yakubu Yusuf, told the panel that the new plants will adopt a dry process and bag filter technology which will aid in dust control during production.

According to Yusuf, "we will equally adopt other measures, such as construction and clearing of necessary channels to check issues of flooding. As part of our expansion project, we have plans to build a trailer park that will conveniently take about 600 trucks".

"As a company, we carry out our manufacturing in compliance with enabling federal laws in Nigeria, such as the Blasting Ordinance. Our operations are also guided by the Lafarge Group standard, which conforms to international standards in cement production. We believe our host communities will embrace us more with the new technology which is much better in terms of dust control," he said.

Earlier, the Minister for Environmnent, Housing and Ur