November 9, (THEWILL) – BUA Cement Plc’s profit after tax increased by 59.8 percent to N463.10 billion in the first nine months of 2026, but behind the earnings growth are rising borrowing obligations, higher energy expenses and substantial cash commitments to shareholders and expansion projects.
The company’s unaudited financial statements for the nine months ended September 30, 2026, showed that revenue increased by 26.55 percent to N1.09 trillion from N858.73 billion in the corresponding period of 2025. Profit before tax rose by 64.43 percent to N556.70 billion from N338.57 billion, while profit after tax increased from N289.86 billion to N463.10 billion.
At first glance, the performance suggests that BUA Cement is converting higher sales into stronger earnings. However, the balance sheet and cash flow statements raise questions about how much of the improvement is supported by operating performance and how much financial pressure is accumulating as the company expands.
The first positive development is the improvement in operating profitability. Gross profit increased by 44.19 percent to N620.27 billion, significantly faster than revenue growth. Consequently, the gross profit margin improved to 57.08 percent from 50.09 percent.
Operating profit also increased by 46.73 percent to N536.51 billion from N365.63 billion, indicating that the improvement was not driven solely by financing or other non-operating income.
A closer look at sales, however, shows that bagged cement remains the company’s dominant revenue source. Revenue from bagged cement increased by 18.96 percent to N1.02 trillion, accounting for approximately 93.8 percent of total revenue.
Bulk cement sales provided an additional growth driver, rising to N67.17 billion from N1.69 billion in the corresponding period of 2025. Despite the substantial increase, bulk cement still represented only about 6.2 percent of total revenue.
The improvement in margins came despite higher energy expenses, which remain one of the biggest cost pressures facing cement manufacturers in Nigeria.
BUA Cement’s energy consumption costs increased by 21.53 percent to N216.62 billion from N178.24 billion. The increase reflected higher energy expenses during the period, which management attributed partly to supply constraints and elevated prices associated with geopolitical tensions in the Middle East.
However, total cost of sales increased by just 8.8 percent to N466.45 billion, slower than revenue growth. This helped the company improve its gross margin despite the increase in energy expenses.
Management attributed part of the efficiency gains to lower operations and maintenance charges and savings from its LNG-powered trucks. Operations and maintenance service charges declined by approximately 13.6 percent to N104.58 billion from N121.12 billion.
The company also reported that energy costs had normalised following supply constraints during the period. Nevertheless, the sustainability of these savings will depend on energy prices and the company’s ability to maintain operational efficiency as production expands.
Another important contributor to earnings was the reduction in financing expenses. Finance costs declined by 36.68 percent to N35.52 billion from N56.10 billion, while finance income increased to N26.55 billion from N9.94 billion.
Consequently, net finance costs narrowed sharply by 80.6 per cent to N8.97 billion from N46.15 billion.
BUA Cement also recorded a net foreign exchange gain of N29.16 billion, compared with N21.63 billion in the corresponding period of 2025.
These developments helped lift profit before tax faster than revenue. However, the improvement in net finance costs and the higher foreign exchange gain mean that the 64.43 percent growth in pre-tax profit should not be interpreted as an equivalent increase in underlying cement operating performance.
The more significant concern emerges from the company’s borrowing position.
Total borrowings increased to approximately N613.08 billion as of September 2026 from N469.38 billion at the end of December 2025. When outstanding debt securities are included, total debt obligations stood at approximately N656.85 billion, compared with N526.63 billion at the end of 2025.
This represents an increase of about 24.7 percent in total debt obligations within nine months.
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The cash flow statement provides further insight into the company’s financing requirements. BUA Cement received N233.27 billion from new borrowings during the period but repaid N69.10 billion in borrowing principal. It also repaid N14.38 billion in debt securities principal.
The increase in debt coincides with an expansion programme aimed at raising installed production capacity from 17 million tonnes to 23 million tonnes annually.
The company is pursuing a new 3-million-tonne-per-annum cement plant in Ososo, Edo State, alongside another 3-million-tonne expansion at its Kalambaina operations in Sokoto State.
Its property, plant and equipment increased to N1.27 trillion from N1.18 trillion at the end of 2025, while purchases of property, plant and equipment amounted to N127.50 billion during the nine months.
The expansion could strengthen BUA Cement’s ability to serve a larger market and benefit from increased demand. However, the additional capacity must generate sufficient revenue and operating cash flow to justify the investment and service the associated borrowing obligations.
The company’s dividend payments add another layer to its financial commitments.
BUA Cement paid N338.64 billion in dividends to shareholders during the nine-month period, compared with N69.42 billion for the entire 2025 financial year. Notably, the company stated in its financial statements that the dividends were paid from capital profits.
Although the payout rewards shareholders, its scale raises questions about how much internally generated cash remains available for capital expenditure, debt repayment and working capital.
Net cash generated from operating activities stood at N304.54 billion, while purchases of property, plant and equipment amounted to N127.50 billion. This left approximately N177.03 billion after capital expenditure, below the N338.64 billion paid in dividends by about N161.61 billion.
Consequently, operating cash generated during the period was insufficient to cover both investment spending and dividend payments. Cash and short-term deposits also declined to N266.42 billion from N280.38 billion at the end of 2025.
The company therefore had to accommodate the gap through its available liquidity and financing inflows. Its cash flow statement showed that cash and cash equivalents declined by N10.07 billion during the period, after accounting for financing, investing and operating activities, as well as exchange rate effects.
The figures do not necessarily indicate an immediate financial crisis. BUA Cement remains highly profitable, its operating margins have improved, and its expansion programme could create additional earnings capacity. Nevertheless, the pace of borrowing, dividend payments and investment spending deserves closer attention.
The central test for the company will be whether its new capacity can generate enough incremental sales and operating cash flow to support its financing obligations without weakening liquidity.
For now, BUA Cement’s earnings growth reflects genuine improvements in operating performance, but the rising debt burden and substantial cash distributions show that profitability alone may not tell the full story of its financial strength.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
