Earnings Update- CCNN: H1 2019.

Cement Company of Northern Nigeria (CCNN) continues to leverage on its expanded capacity, dominance in the North and geographical proximity to neighboring countries to ramp up production. The financial results for H1:2019 showed that revenue was propelled by the aforementioned factors to reach NGN32.15bn from NGN12.08bn in H1:2018. From our analysis, the company maintained 80% capacity utilization while prices were heavily discounted, as part of the industry wide competition. CCNN remains competitively positioned to maintain 80% capacity utilization, hence, our outlook for volume remains the same. However, price discounting will continue to be a tool used by players to defend/increase market share, effectively offsetting the price increase that occurred in April. Case in point is the expanded capacity of the BUA Group with additional capacity of 4.5MTA in H1:2019 and the typical weaker sales volume in Q3, which is expected to be accompanied by stiffer competition. Thus, our revenue projection has been affected by the aggressive discounting which has reversed our initial forecast of 7% price increase. Therefore, our revenue projection has been revised downward to NGN63.60bn. Kindly find attached the full report.

Cement Company of Northern Nigeria (CCNN) continues to leverage on its expanded capacity, dominance in the North and geographical proximity to neighboring countries to ramp up production. The financial results for H1:2019 showed that revenue was propelled by the aforementioned factors to reach NGN32.15bn from NGN12.08bn in H1:2018. From our analysis, the company maintained 80% capacity utilization while prices were heavily discounted, as part of the industry wide competition.
CCNN remains competitively positioned to maintain 80% capacity utilization, hence, our outlook for volume remains the same. However, price discounting will continue to be a tool used by players to defend/increase market share, effectively offsetting the price increase that occurred in April. Case in point is the expanded capacity of the BUA Group with additional capacity of 4.5MTA in H1:2019 and the typical weaker sales volume in Q3, which is expected to be accompanied by stiffer competition. Thus, our revenue projection has been affected by the aggressive discounting which has reversed our initial forecast of 7% price increase. Therefore, our revenue projection has been revised downward to NGN63.60bn. Kindly find attached the full report.