Dangote, BUA, Lafarge: Which performed better in 2024?

Nigeria’s cement giants, Dangote Cement, BUA Cement, and Lafarge Africa are some of Nigeria’s most profitable companies in 2024, collectively posting a net profit of N677.3 billion—an 18% increase from the N576.2 billion recorded in 2023.

On the surface, Dangote Cement appears to have outperformed its competitors in terms of sheer size, generating N3.58 trillion in revenue, compared to BUA Cement’s N876.5 billion and Lafarge Africa’s N696.8 billion.

However, while Dangote Cement stands out as the most profitable cement producer, Lafarge Africa offers a compelling argument for investors looking for value.

When evaluating financial performance, it goes beyond revenue figures. A comprehensive comparison must consider profitability, liquidity, efficiency, and valuation metrics to determine which company delivered stronger results.

Profitability Metrics

Dangote Cement’s revenue surged 62% in 2024 to N3.58 trillion, up from N2.21 trillion the previous year. Lafarge Africa followed with a 72% revenue increase to N696.8 billion. However, BUA Cement led in revenue growth, posting a 91% increase from N460 billion in 2023 to N876.5 billion in 2024.

Despite BUA Cement’s revenue growth, Dangote Cement remained dominant in profitability. It recorded a gross profit of ₦1.93 trillion, achieving a 54% gross margin. Lafarge Africa followed with ₦346.7 billion in gross profit and a 50% margin, while BUA Cement trailed with ₦300.2 billion and a 34% margin.

In operating profit, Dangote Cement led with ₦1.15 trillion and a 32% margin, outpacing Lafarge Africa’s ₦193 billion (28% margin) and BUA Cement’s ₦144.3 billion (16% margin). Net profit figures showed both Dangote Cement and Lafarge Africa posting a 14% net margin, while BUA Cement reported an 8% net margin with ₦73.9 billion in net profit.

For Return on Assets (RoA), Lafarge Africa led with 12%, followed by Dangote Cement at 9.7%, and BUA Cement at 5.3%. Return on Equity (RoE) saw Dangote Cement at 26%, Lafarge Africa at 21%, and BUA Cement at 19%.

Based on the assessed profitability metrics, Dangote Cement emerged as the most profitable cement producer in 2024.

Read also: Price increase hauls cement makers N677.4bn profit in 2024

Liquidity Metrics

In terms of liquidity, Lafarge Africa holds a significant advantage over Dangote Cement and BUA Cement across all key ratios.

Current Ratio: Lafarge Africa (1.01) vs. Dangote Cement (0.74) and BUA Cement (0.65).

Quick Ratio (Excluding Inventory): Lafarge Africa (0.76) vs. Dangote Cement (0.37) and BUA Cement (0.48).

Cash Ratio: Lafarge Africa (0.58) vs. Dangote Cement (0.05) and BUA Cement (0.15).

With stronger short-term liquidity, Lafarge Africa is better positioned to meet its financial obligations without relying on asset sales, while Dangote Cement and BUA Cement face greater liquidity constraints—particularly in terms of cash availability.

Efficiency Metrics

Lafarge Africa also led in asset turnover ratio, a key measure of how efficiently a company uses its assets to generate revenue. Lafarge recorded a 0.70 asset turnover ratio, outperforming Dangote Cement (0.56) and BUA Cement (0.56).

However, BUA Cement demonstrated the strongest inventory management, achieving an inventory turnover ratio of 4.69, ahead of Lafarge Africa (4.42) and Dangote Cement (3.09). This suggests that BUA Cement cycles through inventory more efficiently than its competitors.

Valuation Metrics

With an earnings per share (EPS) of N29.74, Dangote Cement recorded a price-to-earnings (P/E) ratio of 16.13x. In comparison, BUA Cement, with an EPS of N2.18, had a significantly higher P/E ratio of 42.66x. Lafarge has the lowest price-to-earnings ratio of 12.06x. Among the three, Lafarge Africa appears to be the most attractively valued based on its lower P/E ratio, suggesting a relatively undervalued stock

In terms of price-to-book (P/B) ratio, Dangote Cement stood at 3.70x, which is less than half of BUA Cement’s 7.76x. Lafarge Africa has a significantly lower P/B ratio of 2.39x.

Lafarge Africa appears to be the most attractively valued stock among the three cement producers, with the lowest P/E (12.06x) and P/B (2.39x) ratios, suggesting it may be undervalued relative to its earnings and assets. Dangote Cement, with a P/E of 16.13x and a P/B of 3.70x, maintains a balanced valuation, reflecting strong earnings and asset value. Meanwhile, BUA Cement’s significantly higher P/E (42.66x) and P/B (7.76x) indicate that investors are pricing in strong future growth, despite its lower current earnings and book value.

While Dangote Cement was the most profitable cement producer in 2024, Lafarge Africa stood out in liquidity, efficiency, and valuation metrics. BUA Cement, despite its strong revenue growth and efficient inventory management, remains the most expensive stock, with high valuation multiples. Investors are clearly pricing in strong future growth potential, but its current fundamentals lag behind its competitors.

Ultimately, Dangote Cement delivered the strongest profitability, Lafarge Africa showed superior financial stability, but BUA Cement remains the priciest stock. Investors will need to weigh growth potential against valuation and liquidity risks when considering these cement giants.