• Thursday, April 18, 2024
businessday logo


Inside details of cement makers’ full-year financial performance

Inside details of cement makers’ full-year financial performance

The combined earnings of cement manufacturers in Nigeria increased last year despite the country’s economic headwinds.

According to the firms’ latest financial statements, Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc recorded a total after-tax profit of N576.17 billion in 2023, up from N536.97 billion in 2022.

Operating expenses for cement producers rose by 23.4 percent to N638.63 billion from N517.44 billion.

Here are the key financial highlights of the cement makers’ performance

Profit margins

Profit margins denote the share of a company’s sales revenue retained as profit after deducting all costs.

Despite facing a challenging business landscape in 2023 due to reforms and increasing inflation rates, cement manufacturers experienced a decrease in their bottom lines.

However, Dangote Cement led in profitability, earning N455.58 billion compared to N382.31 billion, with a profit margin of 25.0 percent, down from 32.4 percent.

Following suit, Lafarge’s profit decreased to N51.14 billion from N53.65 billion, but its profit margins improved to 19.90 percent from 18.96 percent.

BUA Cement’s profit also declined to N69.45 billion from N101.01 billion in 2022, accompanied by a decrease in profit margins to 14.70 percent from 33.5 percent.

Foreign Exchange losses recorded an increase

FX losses saw a notable surge. Following the liberalisation of the FX window in June, resulting in a devaluation of the naira by more than 70 percent, cement manufacturers experienced a significant increase in FX losses.

Cement production relies on many imported inputs, such as gypsum, machinery, explosives to blast the mines, spare parts, and propylene to produce bags, all of which are imported using dollars.

FX losses soared by 251.5 percent to N255.08 billion from N72.56 billion previously.

Dangote Cement witnessed a surge of 204.25 percent in FX losses, reaching N164.08 billion compared to N53.93 billion.

Similarly, Lafarge Africa reported FX losses of N21.04 billion, marking a 60.3 percent increase from the N13.3 million reported.

BUA Cement’s FX losses escalated to N69.96 billion from N5.50 billion.

EBITA margin

EBITA Margin, short for Earnings Before Interest, Taxes, Depreciation, and Amortisation, is a key metric that focuses on a company’s core profitability and cash flow generation

It’s calculated by dividing EBITDA by total revenue. This metric offers insights into a company’s financial health as it excludes the impact of unique decisions and tax regulations when evaluating performance.

Dangote Cement’s EBITA margin ranged from 40.1 percent to 43.6 percent.

BUA Cement’s EBITA margin stood at 36.90 percent, compared to N43.61 percent.

Lafarge Africa achieved an EBITA margin of 31.87 percent, up from 29.20 percent.

Revenue increased as a result of an increase in price and volume

Revenue surged due to an uptick in both price and volume. Cement manufacturers collectively experienced a boost in revenue, driven by increases in both price and volume, reaching a total of N3.08 trillion compared to N2.35 trillion.

Dangote Cement led the pack with revenue totalling N2.21 trillion, followed by BUA Cement at N0.46 trillion and Lafarge Cement at N0.41 trillion.

In October, BUA Cement announced a reduction in the price of its cement product to N3,500 per bag, aligning with its commitment to fostering development in the building materials and infrastructure sectors. However, despite such efforts, the price of cement has still soared, with reports of it being sold for as high as N10,000 to N11,000 per 50kg bag.

Debt to equity ratio

The debt-to-equity ratio serves as a financial indicator that reveals the proportion of debt and equity utilised to fund a company’s operations, offering insights into its financial standing, risk, and stability. It also assesses whether there’s adequate shareholder equity to settle debts in the event of declining profits.

A lower ratio reflects efficient financial management, indicating reduced dependence on debt and enhanced financial stability. Conversely, a higher debt-to-equity ratio suggests a heightened risk to shareholders, increasing the likelihood of bankruptcy in the event of profit downturns.

BUA Cement saw the highest debt-to-equity ratio increase to 2.16 from 1.13, while Dangote Cement’s ratio decreased to 1.28 from 1.43, and Lafarge Africa’s ratio rose to 0.57 from 0.44.

BUA Cement’s borrowing surged to N295.47 billion from N44.70 billion, Lafarge Africa experienced a decline in borrowings to N1.53 billion from N1.25 billion, and Dangote Cement’s total loans and borrowings increased to N968.4 billion from N706.7 billion.


The cement industry is renowned for its high capital intensity and substantial investment in infrastructure.

Capital expenditures (CAPEX) represent long-term investments in assets that can profoundly impact a company’s cash flow and profitability.

In the short term, CAPEX may lead to a reduction in cash flow as companies allocate funds to assets that don’t immediately generate revenue.

However, over time, these investments can yield increased cash flow through enhanced productivity, cost reduction, and higher sales.

Dangote Cement reported the highest CAPEX, totalling N140.22 million, followed by Lafarge with N41.49 billion, and Bua Cement with N110.9 billion.

Dangote Cement recorded the highest capex totalling N140.22 million, Lafarge amounted to N41.49 billion, and Bua Cement amounted to N110.9 billion.

The rise in BUA Cement’s CAPEX is evident in its expansion efforts. BUA Cement expanded its Kalambaina Plant in Sokoto by adding a 3 million (MT) line. Additionally, plans are underway to construct another three million MT line in Obu, Edo State, which will increase its installed capacity to nine million MT by 2024.