Dangote Cement Loses N1.12trn as Market Reacts to Reduced Margin
The Nigerian Exchange (NGX) priced down Dangote Cement Plc due to sell pressure on the company’s shares after the first half of 2024 unaudited financial statement was posted on the trading platform.
Dangote Cement Plc grew net profit by 6.37% to N189.904 billion in the first half of 2024, the company’s unaudited financial statement reviewed by MarketForces Africa showed.
While profit climbed, margin depressed by 8%, or 800 basis points, over 12 months. On the Nigerian Exchange, the cement company, which has steadied at N656.7 per share for months, made a negative switch after earnings release.
Investors’ selloffs shake Dangote Cement Plc’s market valuation down by about N1.12 trillion in one day after the company told the Nigerian Exchange its profit rose to N189.904 billion from N178.603 billion in the comparable period in 2023.
Further review of the numbers showed that non-controlling interest or minority shareholders appeared to have reacted to an 8% decline in profit margin.
The reduced profitability of Dangote Cement Plc impacted these shareholders profit sharing in the company. The minority share of the group profit fell by about 60% year on year, while the parent share of profit surged by 7.6% year on year.
On the local bourse, after the results was published, the minority investors took a quick exit as 498,298 shares of the company exchanged hands in one day, in contrast to the latest historical trading records.
The cement company’s revenue increased by 36% to N2.2 trillion for the financial year ended 2023, with a further annualised top line growth of 48% in Q1 2024, GCR Ratings said in a note.
The emerging market rating agency highlighted that Dangote Cement growth was largely driven by higher pricing and the effect of translation gains from Pan African earnings given the weaker Naira.
In the first half of 2024, the cement giant’s revenue rose by 85% to N1.76 trillion following price hike in the market, from N950.832 billion in the comparable period in 2023, its unaudited financials revealed.
However, a spike in production costs affected the company’s strong line performance in the period, justifying an increase in the cement price with Nigeria’s damaging inflation condition.
Details from the cement company’s financials revealed that production costs of sales accelerated by about 118% year on year to N833.273 billion in the first half of 2024, from N383.088 billion 12 months ago.
Gross profit came in at 63.29% to settle at N926.782 billion in the first six months of operation from N567.744 billion in the comparable period.
Profit before tax increased year on year to N292.956 billion, up by 22.13% from N239.863 billion in the first half of 2023. The company’s tax expenses rose as profit surged in the period.
Its unaudited report revealed that Dangote Cement Plc’s tax provision climbed to N103.052 billion in the first half of 2024, from N61.26 billion 12 months earlier.
The cement company has become less profitable over the last 12 months amidst tight business operations, rising costs, and volume growth in the Nigerian market. Its net profit margin slumped to 10.78% in the first half of 2024, from 18.78%.
The share of profit of the non-controlling interest or minority interest in the group dipped by 59.66% to N1.35 billion in the first half from N3.352 billion in the first half of 2023.
The share of profit for the parent company, Dangote Cement Plc, increased by 7.6% to N188.552 billion from N175.251 billion in the comparable period in 2023. #Dangote Cement Loses N1.12trn as Market Reacts to Reduced Margin Liquidity: Banks Drive Yield Surge with T-Bills Selloffs
