Dangote Cement Lost 16.5%, Now Trading at 48% Discount
Dangote Cement Plc settled at about 48% discount to its 52-week high on the Nigerian Exchange on Friday, after the stock fell, rose, and steadied in the local bourse. With production capacity of 52 million metric tonnes annually across various locations on the continent, Dangote Cement has deepened its footprint in African markets.
This substantial capacity makes Dangote Cement a vital player in driving infrastructure development in Nigeria and across other African markets. Nigeria’s high interest rate environment has become a pressure cooker for the high-leverage cement company, coupled with its exchange rate exposure.
Trading data showed that the cement stock fell from N478.80 as investors traded more than 170,000 of its shares in the equities market last week. It rose thereafter when more than 6 million shares were traded on the local bourse.
In the last five trading sessions, Dangote Cement Plc has lost 16.5% of its market value as a result of negative investors’ sentiment ahead of earnings release. The cement company’s share price ended the just concluded week at N400, from N478.8 at the beginning of the week. Unusual huge numbers of shares exchange hands with more on the sell side, resulting in its significant decline in market value.
According to data from the Nigerian Exchange, Dangote Cement Plc.’s 17.040 billion shares outstanding are now worth N6.816 trillion.
In 9M-2024 results, Dangote recorded an unimpressive 0.56% year-on-year increase in profit after tax to ₦279 billion, reflecting the sharp rise in costs and other external economic pressures that contributed to the subdued growth in net profit.
Dangote Cement recorded a 69.06% year-on-year increase in revenue for the nine-month period ending September 2024, propelled by a widespread expansion.
Nigeria revenue growth was driven by a 9.5% year-on-year growth in sales volume to 13.2Mt, boosted by improved route-to-market strategies that mitigated the negative impact of increased rainfall and flooding.
The company’s cost of sales rose by 92.35%, driven primarily by significant increases in the costs of raw materials and energy prices, which surged by 76.47% and 109.37%, respectively. This increase highlights the economic challenges, particularly in Nigeria, due to the rising transportation and logistics costs driven by fuel price hikes, according to PAC Capital Limited.
Dangote Cement Plc net finance costs grew aggressively, up by 149% year on year to N422.09 billion. This was primarily due to a +152% increase in interest expense and foreign exchange losses reflecting a higher interest rate environment and effects of naira depreciation. #Dangote Cement Lost 16.5%, Now Trading at 48% Discount Naira Struggles to Keep Value as FX Pressures Mount
