Following the impressive performance of third quarter (Q3) financial results for the period ended September 30, 2018, capital market analysts said Dangote Cement Plc is on a track for impressive financial year end.
The company is known for impressive performance and dividend payout. Dangote Cement stands strong as one of the world’s top 20 cement companies by installed capacity and has secured sufficiency in Nigeria. The company increased its capacity to 46 million tonnes per annum (mtpa), up from just eight mtpa in 2011.
The company recently released its third quarter results on the Nigerian Stock Exchange (NSE) with revenue moved to N685.29 billion compared to the N603.58 billion of Q3, 2017. The firm’s revenue increased by 13.54 per cent due to a 7.51 per cent increase in production volume between Q3, 2017 and Q3, 2018. A closer review also showed that revenue grew by 6.26 per cent in Q3, 2018 compared to Q2, 2018.
EBIT stood smartly over the figure quoted in similar period of 2017 by 22.64 per cent, that is, it is currently at N200.51 billion, as against the previous N163.49 billion. Profit before Tax (PBT) is currently N247.36 billion, this is 12.35 per cent above the previous N220.18 billion, while net profit for the period up to N158.28 billion, compared to N154.12 billion last year. The earnings per share also grew by 2.70 per cent from N9.01 in 2017 to N9.25 in comparable year, 2018.
Operating expense grew by 19.1 per cent year-on-year to N48.4 billion, driven by higher haulage and depreciation expenses. As a result, OPEX to sales grew to 23.9 per cent, while operating income down by 4.7 per cent year-on-year to N66.3 billion.
Net finance cost moderated by 10.4 per cent year-o-year to N4.5 billion hinged on a decline in both its finance income and cost. Finance income declined by 32.9 per cent to N7 billion, while the finance expense declined by 25.6 per cent to N11.6 billion.
Boosted by improvement in the current assets, the total assets figure stood at N1.696 trillion from the previous estimate of N1.666 billion. On the liquidity/risk ratios, the ratio is well within acceptable limits, especially considering the high capital intensiveness of the cement business.
On the profitability ratios, the company recorded a gross profit margin of 58.02 per cent from 56.95 per cent in 2017, when compared to other manufacturing companies, the 40.96 per cent. Profit before tax margin stood at 36.10 per cent, while profit after tax margin stood at 33.10 per cent. The company achieved return on asset of 0.16 per cent and return on equity of 0.20 per cent.
Analysts from CardinalStone Research stated that “we remain optimistic about Dangote Cement’s ability to deliver an impressive result for the 2018 financial year.
“Going into fourth quarter, 2018, we see scope for further revenue growth, as demand picks up post-rainy season. Also, we expect the introduction of new cement products, BlocMaster and Falcon to drive revenues to higher levels.”
They also noted that “in the Pan-African segment, our bet is on an improved performance in Tanzania. We recall that Tanzania has been a major drag to the overall performance of the Pan-African segment due to the temporary shutdown of the Mtwara plant, pending the commissioning of the gas turbines.
“According to management, the gas turbines have been installed, hence, we anticipate increased sales from this segment in the coming quarters.”
The company successfully issued a N50 billion Commercial Paper (CP) under a N150 billion programme, this is the largest issue done by any Nigerian company so far and listed on the FMDQ OTC Exchange.
Group chief executive officer of Dangote Cement, Mr. Joseph Makoju said that “the CP issued under the programme will be deployed towards capital expenditure, working capital and general corporate purpose.”
During the investors’ conference call, according to Cordros Capital, the group has received confirmation of pioneer tax application in Nigeria, and expects to receive the accompanying certificate by end of October 2018
“Ghana operation now has a new management, and a number of cost containment programmes are in place to boost EBITDA going forward and all kilns in Nigeria are now running on Nigerian sourced gas and coal.
“Own-mined coal accounts for up to 90 per cent of coal used by the group in Nigeria. The balance is obtained from third party companies as a strategy to ensure security of fuel supply
“The group is in the process of commissioning a 2.5Mts per year plant in Niger Republic in 2020. The investment is planned to reduce the burden of exporting from Nigeria as most of the group’s export from Nigeria is currently to Niger, and upon completion, will serve neighbouring Chad, Burkina Faso, and Mali.
“Group is adopting ‘regional pricing strategy’ to protect market share in Nigeria, and is also flexible on pricing in some outside Nigeria markets.”
Recently, the company launched BlockMaster cement, a premium product, high quality preferred by block makers and high compressive strength preferred by construction heavy-duty companies. The product has been well-accepted in the market.
Recently, Makoju said “the increase seen in the company was helped by our decision to increase our use of local coal in Nigeria and that also helped to improve our fuel security, maintain production uptime and it reduced our need for foreign currency. We source coal from our parent company, Dangote Industries and from another Nigerian supplier, and we are very happy with the way this has worked out for us because it has enabled us to phase out the use of expensive low pour fuel oil in our kilns and also to reduce our use of imported coal.”
On the future growth plans for the Group, Makoju said “as it stands, I think we will focus on building new grinding plants along the coast of West Africa, and ensure we have clinker export facilities in Nigeria. We are looking at the possibility of two new lines in Nigeria, perhaps by the end of 2020 and its likely these will be in Edo state and Obajana, with a combined capacity of 6Mta.”
Since inception, the Dangote Group has experienced phenomenal growth on account of quality of its goods and services, its focus on cost leadership and efficiency of its human capital.
Dangote Cement is ready to pursue a wider vision which is to be a global leader in cement production, respected for the quality of its products and services and the way it conduct its business.
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