BUA Cement, owned by billionaire, Abdulsamad Rabiu, reported its revenue grew by 51.7% in the second quarter of 2022. While this is an impressive growth, the company has a spending problem, IgbereTV reports
During Q2 this year, BUA Cement generated N188.56 billion, surpassing the N124.27 billion the manufacturer had grossed as revenue in the corresponding period of last year.
While the company doesn’t have an issue raising revenue, its financial problem rears its head as a result of the management’s inability to curb rising production cost, which is eating deep into BUA Cement’s revenue, and sinking its profit – this threatens shareholders’ investment growth.
Analysis of the company’s financial statements showed that cost of sales, which represents cost of production, rose by 47.3%, growing almost as high as revenue, and gulping the whole of its profit.
IgbereTV understands that BUA is spending more than its generated profit on production of its products, considering its gross profit for Q2 2022 was N91.05 billion, which is N6.44 billion lower than its N97.5 billion cost of sales.
Last year second quarter, BUA Cement’s production cost, N66.15 billion, also surpassed the N58.12 billion profit grossed for the same period, and the former stood 47.3% behind that of Q2 2022.
The impact of the rising cost and the management’s inability to find ways to reduce its expenses was felt on the profit after tax (PAT). Despite growing by 41.4% to N61.36 billion in Q2 this year, surpassing the N43.3 billion of Q2 2022, there was nothing left in the profit to share
