Dangote Cement Grows Profit by 4.8% to N381bn
Amidst a tough operating environment, Dangote Cement Plc boosted its sales revenue while profitability increased, albeit, moderately. Its annual profit rose 4.8% to N381.33 billion, its audited financial statement shows.
The cement company’s board of directors proposed a final dividend of N20 per share to shareholders, according to its regulatory filing.
Dangote cement boosted its annual earnings per share figure by 4.8% to N22.27 from N21.24 reported in the comparable year in 2021. Out of this, the management declared a dividend of N20 with the qualification date slated for 30 March 2023.
In its audited financial statement submitted to the Nigerian Exchange, Dangote Cement Plc reported a 17% year-on-year increase in revenue to N1.62 trillion from 1.38 trillion recorded in 2021.
The higher revenue reported could be attributed to an increase in prices, amidst a decline in production volumes as the company seeks to protect its profit margin, analysts said. In the full-year result, the cement company battled increased costs of doing business in Nigeria – specifically- due to inflation pressures.
In a note, CSL Stockbrokers said the company’s Cost of Sales (adjusted for depreciation) rose faster than revenue, up 20.4% year on year to N572.13 billion from N475.07 billion in 2021.
The pressures dragged gross performance in the year. The full-year result indicates that Dangote gross margin marginally declined by 100 basis points from 65.7% to 64.6% for the financial year 2022.
The rise in production cost of sales was driven mainly by an uptick in raw materials cost and cost of energy, according to the report reviewed by analysts including foreign exchange losses.
The cement company’s operating Expenses (adjusted for depreciation) were up 49.4% to N345.48 billion in 2022 from N231.20 billion in 2021. The surge was driven by both administrative expenses adjusted for depreciation (up to N71.52 billion from N57.68 billion in 2021) and selling & distribution expenses.
In 2022, the cement company’s net finance cost rose by 39.4% year on year to N62.633 billion from N44.94 billion in the comparable year in 2021.
Analysts said this is a result of an increase in Interest Income (up 86.4% to 38.72 billion in 2022) amidst a stronger increase in interest expense which was up by 98.4% to N130.37 billion in 2022.
Unsurprisingly, the pressures ate into the company’s bottom line in the toughest year of its existence. The audited statement showed that Dangote Cement’s pre-tax profit declined by 2.8% to N523.02 billion in from N537.89 billion in 2021.
However, a significant decline in tax expenses supported its posttax profit performance in the year. According to its audited report, net income increased by 4.8% to N381.33 billion from N363.93 billion following reduced tax expenses.
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