This year's second quarter isn't a good period for shareholders of cement company, Lafarge Africa, as the management couldn't stop its revenue from declining in Q2 2020, failing to surpass the revenue of the 2019 corresponding period (Q2 2019). AllNews gathered that Lafarge's stock price also crashed, as investors became wary of the Lafarge stocks.
The company had recorded N52 billion in the second quarter of 2019, only to record a shortage in its revenue for Q2 this year, as it could only generated N49.4 billion revenue. While the Group also couldn't generate beyond the N59.8 billion revenue its recorded in 2019 Q2, as Lafarge reported in its Unaudited Condensed Financial Statements for Q2 2020, that it gross N56.8 billion this year Q2.
The Q2 period is for the April, May and June period - the second three months of this year, which makes up the first half of 2020. But while the management couldn't stop the revenue from declining in the second quarter, the company was able to reduce its cost of production, thereby, shielding its gross profit from the drop.
AllNews gathered that the Group's cost of production decreased to N32.7 billion in Q2 this year, falling below the N38 billion it spent on production in the corresponding period of 2019. While the cost of production for the Company also dropped to N26.9 billion from the N31 billion recorded in Q2 last year.
This helped the Company's second quarter's gross profit to surpass the N21 billion generated last year second quarter, after Lafarge reported that its gross profit was N22.5 billion this year's Q2. A further check disclosed that the Group also surpassed the N21.8 million profit generated in Q2 2019, having secured N24 billion in Q2 2020.
Lafarge's Group Profit before tax from continuing operations for the three months period of April, May, June 2020 was pegged at N19.3 billion, generating more than the N10.8 billion it gross last year Q2. However, the growth was not recorded in the Company's Profit before tax, as it crashed from the N17.9 billion of 2019 Q2, to N17.5 billion this year's Q2.
Profit after tax for the Company during the period of Q2 2020 significantly reduced to N14.1 billion, showing a massive decline from 2019 Q2's profit after tax which was N17.4 billion. However, the Group Profit after tax for the Group in three months of Q2 2020 rose to N15.2 billion from the N5.8 billion recorded in Q2 2019.
While the revenue of Lafarge declined, the investors' confidence is also dropping. This was noticed on the day Lafarge released its Unaudited Condensed Financial Statements for Q2 2020. The stock price of the company went down on the same day Lafarge released its financial result.
Financial results often have an impact on investors' confidence, as they make their trading decision based on the financial status of the company. The share price of Lafarge on the Nigerian Stock Exchange (NSE) fell from N11 per share on July 2020, to N10.95 kobo per share the next day, July 24, 2020. With the revenue decline, investors' confidence will be wavering, and this could further affect the stock price of Lafarge.