Dangote Cement’s pre-tax profit hits N166 billion amidst surge in cement price
Dangote Cement, Africa’s biggest cement maker, hit its all-time peak for quarterly revenue in the year to March as the price of the binder nearly doubled year-on-year.
In February, the retail price of cement rose to between N10,000 and N12,000 across many parts of Nigeria, weeks after it was sold for prices ranging between N5,000 and N6,000 earlier in January.
Dangote Cement’s turnover is now N817.4 billion, according to its latest earnings report.
Revenue received a boost from an output expansion of 26.1 per cent in Nigeria, its home operation, where consignments comprising seven ships of clinker were transported to neighbouring Cameroon and Ghana during the period, boosting exports.
The corporation bucked the price of a tonne of cement dramatically, setting it 78 per cent higher than a year ago.
Growing profit was daunting in the period on account of certain factors notably a significantly higher production cost which left gross profit heavily pressured and a 551.4 per cent leap in net exchange loss made possible by a much weaker naira.
CEO Arvind Pathak said in a statement: “Despite elevated cost pressures, increased borrowing costs, and a further currency weakening, our first-quarter results reflect our commitment to navigating challenges effectively.”
“During the quarter, we intensified our emphasis on exports, dispatching 7 ships from Nigeria to Ghana and Cameroon. As a result, our Nigerian exports surged by 87.2%,” the helmsman added.
Operating profit took a hit from selling and distribution expenses, which climbed by 111.4 per cent to N145.3 billion after the spending on haulage soared more than twofold.
That happened while inflation continued to soar, touching its summit in 28 years in March.
It could set the tone for the third rate hike in the country this year, as the Central Bank of Nigeria seeks the balm to soothe a prolonged cost of living crisis that is leaving companies’ finances strained and has wearied the purchasing power of consumers and households.
Profit before tax was up 13.3 per cent at N166.4 billion, while profit after tax slightly improved by 2.9 per cent, rising to N112.7 billion.
Cost pressures so much weighed on the bottom line that the net profit margin, which shows the proportion of after-tax profit to revenue, dropped to 13.8 per cent, compared to almost 27 per cent in the same period last year.
Dangote Cement, which has broad footprints across markets in Africa, generated N410.4 billion as an extraordinary income from translating net gains from pan-African investments into naira, whose exchange rate to the dollar jumped to a record after a devaluation early this year.
On that score, the total comprehensive income for the period came to N523 billion, more than five times bigger than the figure for the first quarter of 2023.
