Dangote Cement Profit Sinks 23.41% as Finance Cost Spikes
Dangote cement Plc sees a heavy drop in its profitability, though sales increased by 15.17% year on year to about N1.18 trillion, according to its nine months of 2022 interim financial statement submitted to the regulator amidst a tussle with Kogi State over ownership of its Obajana plants.
In the 9-month results posted on the Nigerian Exchange, the cement company’s profit performance fell by 23.41% to N213.101 billion from N278.250 billion in the comparable period in 2021.
The cement producer’s after-tax profit was negatively impacted by higher borrowings which resulted in increased finance costs. Net finance costs popped higher by more than 180% year on year to N97.723 billion from N34.837 billion 12-month ago.
Also, the company’s sales costs rose 19.94% to N483.881 billion in the same period from N3403.388 billion in the corresponding period. Though costs of sales accelerated, the impact on gross profit was small in relation to the size of its revenue.
In a statement, the management said Africa’s largest cement producer increased the overall volume of cement sales by 6.2 percent to 20.8metric tons. This was achieved despite the elevated inflation that is due to a very volatile global environment.
To further increase the supply of cement across its operational base, the company has also commissioned its power plant at Okpella and is progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.
Chief Executive Officer of Dangote Cement, Michel Puchercos, who disclosed this while presenting the third quarter results to the Nigerian Stock Exchange, over the weekend, further explained that “To mitigate the impact of the significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels.
“So far this year, we have co-processed 101,553 tonnes of waste representing a 77% increase over 9M 2021. We are on track to commission our Alternative Fuel feed system at Obajana lines I and V, and Ibese line II in November.
“In addition, we are ramping up our investment in Compressed Natural Gas (CNG), to reduce our AGO usage”
He explained that the company recorded an increase in revenue of ₦1.177 trillion, up 15.2% compared to last year, and Group EBITDA of ₦515.9 billion, up 0.2% with earnings before interest tax depreciation and amortization (EBITDA) margin of 43.8%”
Dangote Cement has 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. READ: DANGCEM Sees Higher Valuation as Analysts Show Confidence in Earnings Strength
Obajana plant in Kogi state, Nigeria, is the largest in Africa with 16.25Mta of capacity across five lines while the 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 the 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. Detail from the cement producing company’s total assets dropped by 2.44% to N2.333 trillion.
# Dangote Cement Profit Sinks 23.41% as Finance Cost Spikes