Cement makers thrive amid uncertainty

Cement is one the fastest growing sub sector of the Nigerian economy buoyed by rapid urbanisation and surge in demand for building materials.

This discussion is centred on the full-year 2013 results of the four dominant players in the Nigeria cement industry – Dangote Cement, Lafarge, Ashaka, and Cement Company of Northern Nigeria (CCNN).

The cumulative revenue of the aforementioned companies for the year ended December 2013, rose by 22 percent to N522.45 billion from N423.37 billion in FY12. The N522.45 billion figure is equivalent to 0.63 percent of Nigeria’s estimated Gross Domestic Product (GDP) of N80.22 trillion.

With gross and net margins of 63 percent and 52 percent, respectively, Dangote remains the bellwether company in the sector as alternative and cheaper source of energy supply such as gas have helped lower costs.

Its input and operating costs were at the bare minimum as its cost of sales margin was 37 percent, while operating expense margin stood at 13 percent, the lowest in the industry.

Lafarge’s impressive margins were buoyed by improved energy efficiency as the utilisation of gas to Low Pour Fuel Oil (LPFO) improved, while the commissioning of its power plants at Ewekoro further underpinned margins.

Ashaka Cement is also thriving in the cement sector as it recorded gross and net margins of 29 percent and 13 percent, respectively.

Its year-end 2013 results would have been more impressive if not for political unrest in the North coupled with huge cost as sales. The CCNN recorded margins of 29 percent and 13 percent, respectively, while cost of sales margin was 69 percent and operating expense stood at 23 percent.

It must be noted that the company’s full-year 2013 results were stellar as top- and bottom-line performance surged.

Nigeria’s cement industry grew production by 15.6 percent to nearly 21.2 million tons in 2013.

BALA AUGIE