Lafarge Africa Q1 2026: Operating Leverage and Cash Build Power 101% Profit Jump
Lafarge Africa opened 2026 with its strongest first-quarter performance on record, doubling profit after tax to N97.95bn from N48.64bn a year earlier, a 101.4% increase. This was not just a revenue story. It was an operating and treasury story: gross margin expanded to 61.4% from 49.5%, finance income surged nearly sevenfold to N12.55bn, and operating cash flow swung from a N118.36bn outflow in Q1 2025 to a N139.98bn inflow. The result is a business that grew revenue 34.8% to N334.88bn while converting that growth into sharply higher cash and equity.
The company remains Nigeria’s third-largest cement producer, with operations spanning cement, aggregates, and ready-mix concrete. Its footprint is domestic-focused through AshakaCem and its South West/South East plants, with no material Pan-Africa exposure. That Nigeria concentration became an advantage this quarter. Cost of sales rose only 3.2% to N129.39bn despite the 34.8% jump in revenue, reflecting better energy mix, plant efficiency, and fixed-cost absorption. Gross profit increased 67.1% to N205.49bn. The cost discipline extended through operations: selling and distribution costs grew 6.2% to N41.34bn, slower than revenue, while administrative expenses rose 75.1% to N22.64bn largely on higher technical service fees and staff costs. Even after that, operating profit nearly doubled to N141.27bn, with operating margin hitting 42.2% versus 28.9% in Q1 2025.
Finance was the other lever. Finance income climbed to N12.55bn from N1.84bn on higher short-term deposits and realized FX gains, while finance costs rose to N4.69bn from N0.39bn mainly due to unrealized FX movements. The net position was still a N7.85bn positive swing, taking profit before tax up 103.9% to N149.12bn. Tax expense more than doubled to N51.17bn, giving an effective tax rate of 34.3%, but profit after tax still crossed N97.95bn. Earnings per share printed 608 kobo, up from 302 kobo a year earlier. Annualized, that is 2,432 kobo, a run-rate few expected from Lafarge’s recent base.
The balance sheet shows the profit is real cash. Total assets grew 13.6% in three months to N1.37trn, driven by cash and cash equivalents up 13.7% to N441.44bn and PPE up 17.4% to N526.62bn as capex accelerated. The company spent N88.76bn on property, plant and equipment in Q1 alone, nearly nine times Q1 2025’s N10.27bn, signaling confidence in demand and a push to debottleneck. Current assets rose 21.3% to N678.93bn, while current liabilities increased 15.4% to N481.65bn. The current ratio improved to 1.41x from 1.34x at December 2025, and quick ratio sits at 1.18x. Unlike peers that deleveraged in 2025, Lafarge entered Q1 with very little debt. Loans and borrowings are just N1.49bn, mostly lease liabilities. Net cash position is therefore N439.96bn, explaining the jump in interest income. Equity expanded 14.1% in the quarter to N791.95bn on retained earnings growth to N602.88bn. Annualized ROE using Q1 PAT and December equity is 56.5%. Net margin hit 29.3%, up from 19.6% a year ago.
Cash generation was the clearest evidence of quality. Operating cash flow turned positive at N139.98bn versus a N118.36bn outflow in Q1 2025, helped by profit growth and a much smaller working capital drag. Change in net working capital was only -N9.53bn this quarter compared with -N199.97bn last year, as contract liabilities rose N16.88bn to N132.82bn, indicating strong customer prepayments. Investing cash outflow was N82.75bn on heavy capex, offset partly by N6.25bn interest received. Financing outflow was modest at N0.81bn, mainly lease and interest payments. Cash at period end stood at N439.15bn, up from N103.11bn a year earlier. With that liquidity, Lafarge can fund its N88bn+ quarterly capex pace internally while still accumulating cash.
Ownership changed materially at the end of 2025. Holcim signed an agreement on 1 December 2024 to sell its entire 83.81% stake to Huaxin Building Materials Group Co., Ltd. The transaction was approved by the FCCPC on 25 July 2025. The Q1 2026 results are therefore the first full quarter under the new technical partner. Technical service fees rose to N7.87bn from N4.00bn, computed at 3% of net sales capped at 5% of EBITDA per the agreement. The new owner’s footprint in Asia and experience in cost-efficient cement production will be watched for operational synergies, but Q1 shows Lafarge can already deliver strong margins without it.
Risks remain concentrated in Nigeria’s macro environment. Energy and logistics costs, which the company managed well this quarter, can spike quickly. FX exposure is limited on the debt side given the net cash position, but unrealized FX losses did push finance costs higher. Tax expense at 34.3% of PBT is a drag, and the jump in admin costs bears monitoring if it persists. On the upside, the 1.41x current ratio, N441bn cash pile, and negligible borrowings give Lafarge rare balance sheet optionality among Nigerian manufacturers. With capex accelerating and contract liabilities rising, volume momentum looks intact. If gross margin holds above 60% and finance income remains supported by the cash balance, the Q1 annualized P/E of ∼6.4x at a N155 share price leaves room for re-rating. The quarter confirms Lafarge has moved from recovery to compounding: higher tonnage leverage, tighter cost control, and a treasury function that now adds to earnings rather than subtracting from them.
