Equity Analysis /
Bangladesh

LafargeHolcim: Q3 CY 22 – c21% yoy earnings growth driven by c24% revenue growth

  • LHBL reported EPS of BDT 0.98 in Q3 CY22 against BDT 0.81 in Q3 CY21, implying 21% NPAT growth

  • 444 bps yoy expansion in gross margin is the major earnings driver. It led to 364bps increase in operating profit margin

  • The sale of gray cement increased by 32% and the aggregate unit’s sales more than doubled

Shopnil Paul
Shopnil Paul

Research Associate

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IDLC Securities
19 October 2022
Published byIDLC Securities

21% yoy earnings growth in Q3 CY22. EPS in Q3 CY22 stood at BDT 0.98 against BDT 0.81 in Q3 CY21. In the 9M CY22, Lafarge reported EPS BDT 2.85 against BDT 2.66 in 9m CY21, implying +7% growth.

444 bps yoy expansion in gross margin is the major earnings driver. It led to a 364bps increase in operating profit margin.

There are two reasons for margin expansion. Firstly, the aggregate business generated operating profit margin of c54% in Q3 CY22 compared to c27% operating profit margin in the cement & clinker segment. As a result, aggregate business contribute c22% to the operating profit despite its c12% contribution to the revenue.

Secondly, the profit margin from the cement & clinker segment increased by 255 bps due to higher price of raw materials in the international market. Lafarge, being the sole manufacturer with own limestone sources, could put a cap on its expenses and thus expand margin.