Nigeria’s most capitalised quoted cement company and Africa’s largest cement manufacturer, Dangote Cement Plc has consistently grown its turnover on strong sales.
The board of Dangote Cement recently presented its unaudited financials for the half-year ended June 30, 2022, with a growth of 17.01 per cent in sales revenue within the period.
According to the result, revenue for the period stood at N808.037 billion in the first half of the year 2022, up by N117.493 billion from N690.545 billion. Dangote Cement reported group sales volume of 14.2Mt, consisting of 9.3 Mt done by Nigerian operations while the balance was contributed by operations in other African countries.
Administrative expenses increased from N30.709 billion to N34.134 billion; selling and distribution expenses soared to N135.272 billion from N87.575 billion, while profit from operating activities stood at N318.121 billion, up from N302.197 billion.
Finance income grew from N9.408 billion to N11.645 billion, after interest income stood at N22.001 billion from N9.408 billion, while finance costs increased from N30.351 billion to N75.232 billion.
Profit before tax stood at N281.254 billion; income tax for the period stood at N92.786 billion, resulting in net profit of N172.104 billion.
Looking at the results, analysts at Coronation said, Dangote Cement’s revenue performance in H1 22 was in line with its expectations, saying “we are encouraged that the company was able to take advantage of higher prices amidst dwindling volumes across its Nigerian and Pan-African markets.
“On its operations, the company is ramping up production at the Okpella plant and is deploying grinding plants in Ghana and Cote d’Ivoire, expanding its Pan-African reach. The group has also commenced the third season of its National Consumer Promotion – ‘Bag of Goodies 3’, management continues to drive consumer engagement to support demand ahead of the rainy season into the rest of the year. Thus, we expect these will bode well for revenue growth.”
It also noted that the management of the company plans to intensify its efforts to ramp up the usage of alternative fuels and source materials locally. Thus, we expect a slight reduction in energy costs in third quarter (Q3), 20 22.
According to Coronation, to mitigate the impact of rising energy costs, the company was strengthening its efforts to ramp up the usage of alternative fuels, which aims to leverage waste management solutions, reduce CO2 emissions, and source material locally.
“Overall, we maintain our BUY recommendation on the stock. On our estimates, the stock is trading on 2022F P/E and EV/EBITDA multiples of 11.7x and 6.9x, discounts to emerging market peer multiples of13.8x and 8.7x.”
In a bid to ensure that Cement becomes available in all African countries, chief executive officer of Dangote Cement, Michel Puchercos, revealed that, the company is ramping up production in its Okpella plant, Nigeria and progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.
Ghana and Cote d’Ivoire will join the lists of the following African countries when the grinding plants finally becomes operation. Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.5Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), Zambia (1.5Mta).
Puchercos said: “despite the elevated inflation due to a very volatile global environment, the first half of 2022 has been positive. We recorded increases in revenue and EBITDA that drove strong cash generation across the Group. We recorded revenue of N808.0 billion up 17 percent compared to last year and Group EBITDA of N373.2Billion, up 6.3 percent with an EBITDA margin of 46.2 percent.”
Puchercos explained that significant increase in energy and AGO costs are impacting negatively on production and supply of cement products. He added that, “to drive consumer engagement and support demand ahead of the rainy season; we have commenced the third season of our National Consumer Promotion; ‘Bag of Goodies 3’. On the operational side, we are ramping up production at our Okpella plant and are progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.”
He stated that the volatile international context is strengthening efforts to ramp up the usage of alternative fuels and execution of export-to-import strategy. The company according to him is reducing dependence on imported inputs and making the local markets self-sufficient.
“Our continuous focus on efficiency, meeting market demand and maintaining our costs leadership drives our ability to consistently deliver superior profitability and value to all shareholders,” he added.
In a related development, there are confirmed reports winners have emerged from the ongoing National Consumer Promotion ‘Bag of Goodies 3’. Six consumers of Dangote Cement recently emerged the first set of millionaires in Lagos. Several other also won prizes such as Television sets, Fridges, standing Fans and Generators when a charge on them to continue their patronage to stand the chance of winning the star prize of N5 million.
Also, three lucky Dangote Cement consumers were also presented with one-million-naira cheques each even as many others won various prizes and millions of airtime gifts in Ibadan.
The Pan-Africa Cement manufacturer had weeks ago unveiled a Spell Dangote and Become Millionaires in a season 3 of it Bag of Goodies National Consumer promo, in Lagos during which the Company announced that 500 consumers would win a million naira each while another 100 would win N5 million within four months.
National Sales director, Dangote Cement, Mrs. Funmi Sanni explained that Dangote Cement as a customer caring organization considered no amount as too much to splash on its customers because they are the reason for the existence of the organization.
“We value our customers, they are the reason for our being in business. Apart from the fact that we produce the best quality cement in the industry, we are even the most caring cement company in the industry.
“We are also the cement company with highest number of variety of cement for various application. Our cement is such that when you use our variety for plastering, you may not think of painting the surface again because it is very smooth and colourful and only Dangote can produce that,” she said.
She had explained elsewhere the promo was deliberately planned for this period to help the Dangote Cement customers and consumers because of the hard times brought upon businesses by the Covid-19 disruptions.
Dangote Cement is Africa’s leading cement producer with nearly 51.6Mta capacity across Africa. A fully integrated quarry-to-customer producer, it has a production capacity of 35.25Mta in its home market, Nigeria. Obajana plant in Kogi state, Nigeria, is the largest in Africa with 16.25Mta of capacity across five lines while Ibese plant in Ogun state has four cement lines with a combined installed capacity of 12Mta. The Gboko plant in Benue state has 4Mta while Okpella plant in Edo state has 3Mta. Through recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighbouring countries.
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