Dangote Cement Records Sky-High Earnings Growth in First Half

Dangote Cement Records Sky-High Earnings Growth in First Half

Dangote Cement Plc. has consolidated its market position, records a sky-high earnings growth in the first half of 2021. Valued at N4.218 trillion, Dangote Cement share price surged to N248.10 from N230 barely a month ago.

With buy ratings from key industry analysts, the cement company plans to buy 10% of its shares from the Nigerian Exchange.

Market reports from several investment banking firms maintained buy ratings on the tickers, some are making an upgrade to the company’s earnings forecast. With the increase in sales in the first half, Dangote Cement beats its own projection and could be heading for more in 2021.

In its first half earnings outing, Dangote Cement sales jumped 44.8% to N690.5 billion from N476.9 billion in the comparable period in 2020. This came after the company had crossed the industry’s N1 trillion sales mark in 2020 despite the pandemic-induced lockdown.

Its audited statement show sales printed N1,034 trillion, supported by increased capital spending for infrastructural development in its key market – Nigeria.

Its first half result shows that the company cost of sales increased 36.5%, attributed to expanded volume production.

Gross profit printed at N414.4 billion in the period as against N274.4 billion last year. Improved earnings performance and cost curtailment strengthen margin. The result shows that Dangote Cement gross margin came stronger at 60% from 57.6% in the corresponding period last year.

The increase was actually supported by a 240 basis points decline in costs of sales in the period, perhaps due to a higher operating scale in the period.

Specifically, Dangote Cement lower cost as a percentage of sales to 40% from 42.4% in the first half of 2020.

In the period, operating expenses increased 14.1% to N118.3 billion from N103.7 billion, leaving operating expenses as a percentage of sales at 17.1% from 21.7% in 2020.

Other income sources also witnessed a significant jump, rising 120.8% year on year to N6.1 billion from N2.7 billion in the first half of 2020 record.

Meanwhile, increased borrowing led to a strong uptick in net finance costs. As Dangote Cement raised the company’s debt to equity to about 70%, net finance cost rose to N20.9 billion from N10.6 billion in the first half of 2020.

For the first half, Dangote cement delivered a record-breaking, solid performance as pretax profit expanded more than 72% to N281.3 billion from N162.9 billion in the first half of 2020.

Meanwhile, with a 144.2% increase in tax provision for the period, from N36.7 billion to N89.6 billion, the company settled with a post-tax profit of N191.6 billion, a 51.9% increase above N126.1 billion reported in the comparable period in 2020.

Its debt to equity ratio had jumped to 69.9% from 55.4% in the corresponding period in 2020. As a result, the company delivered a somewhat marginal uptick in net margin, rising from 26.5% to 27.8% at the end of the first half of 2021.

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It thus means that for every N100 sales, Dangote Cement pocketed N27.8 as profit.

Dangote Cement Records Sky-High Earnings Growth in First Half