Nigerian cement makers have recorded an increase in their profit after tax despite the country’s harsh operating environment.
The cement makers which are Dangote Cement, BUA Cement, and Lafarge Africa recorded a total profit after tax of N392.92 billion in the nine months of 2023, an 18.3 percent increase from N332.01 billion in the same period of 2022.
Cement makers recorded a 27.4 percent increase in the cost of sales to N970.2 billion in the nine months of 2023.
“However, cement producers have recently begun facing dwindling volume growth and margin pressures from surges in the cost of energy (especially diesel), distribution, haulage, and other operating expenses,” analysts st CardinalStone said in the report.
“Nonetheless, there is unison across the industry in efforts to rein in these high energy costs by adopting alternative energy sources. Players like BUA Cement mentioned that it has begun utilising locally sourced Liquefied Natural Gas (LNG) at its Sokoto plant,” they added.
“This initiative has helped to diversify its energy mix and reduce its reliance on imported Coal, Low Pour Fuel Oil (LPFO) and AGO,” it said. “In addition, the company signed an agreement with Wartsila OY of Finland to construct a 70-megawatt dual-fuel power plant for its Obu Line 3 project in Edo State to improve energy utilisation.”
CardinalStone noted that Dangote Cement is fully exploring the feasibility of increasing the use of alternative energy in its cement production through the co-processing of wastes such as agro wastes, waste lubricants, tyre-derived fuels, sawdust, and packaging materials.
“Lafarge Africa also disclosed that the company was already substituting fossil fuel with renewable energy (fuels from biomass and other wastes) at its Sagamu and Ewekoro plants.
“There were plans to spread the renewable energy successes in Ewekoro and Sagamu to other plants in the company. In addition, the company also implemented gas-powered trucks that run on Liquified Natural Gas (LNG) for its distribution to reduce reliance on diesel as a primary energy source,” the report said.
The report also stated that finance cost increases have been driven by foreign exchange losses.
Cement makers’ foreign exchange loss rose to N135.37 billion in nine months of 2023 from N78.62 billion in the same period.
“Nevertheless, pioneer tax incentives have consistently helped lower effective tax rates across the industry, which has supported strong EPS growth and cascaded to an average dividend payout ratio of cumulative 70.0 percent across industry players,” CardinalStone said.
Dangote Cement’s basic earnings per share increased to N16.08 from N12.41, BUA Cement’s earnings per share grew to N2.25 from N2.19 while Lafarge Africa’s earnings per share dropped to N2.44 from N2.79.
Here are ten highlights of cement makers’ financial performance in 2023
Profit after tax
Nigerian cement makers’ profit after tax grew 18.3 percent to N392.92 billion in nine months of 2023 from N332.01 billion in the same period of 2022.
Dangote Cement’s profit for the period rose to N 277.55 billion from N213.1 billion. BUA Cement’s profit after tax increased to N76.07 billion from N74.01 billion.
Lafarge Africa’s profit after tax declined to N39.3 billion from N44.9 billion.
Revenue from sales to customers
Cement makers’ revenue from sales to customers increased by 25 percent to N2.14 trillion in nine months of 2023 from N1.71 trillion in the same period of 2022.
Dangote Cement’s revenue from sales to customers increased to N1.51 trillion from N1.18 trillion. Lafarge Africa’s revenue from sales to customers climbed to N289.08 billion from N269.85 billion.
BUA Cement’s revenue from sales to customers surged to N335.86 billion from N262.6 billion.
Cost of production
Cement makers’ cost of production surged 27.4 percent to N970.2 billion in the nine months of 2023 from N761.74 billion in the same period of 2022.
Dangote Cement’s cost of sales increased to N642.74 billion from N483.83 billion. Lafarge Africa’s cost of sales rose to N141.02 billion from N135.08 billion.
BUA Cement’s cost of sales increased to N186.44 billion from N142.83 billion
Distribution cost
Cement makers’ distribution cost increased to N334.4 billion in the nine months of 2023 from N288.12 billion in the same period of 2022.
Dangote Cement’s distribution cost increased to N252.64 billion from N212.86 billion. Lafarge Africa’s distribution cost declined to N60.83 billion from N62.65 billion.
BUA Cement’s distribution cost increased to N20.93 billion from N12.61 billion.
Tax
Cement makers’ income tax surged to N299.4 billion in the nine months of 2023 from N222.86 billion in the similar period of 2022.
Dangote Cement’s income tax expense increased to N277.55 billion from N213.1 billion. Lafarge Africa’s tax amounted to N21.85 billion from N9.05 billion.
BUA Cement did not record tax in the nine months of 2023 but paid N708.69 million in the same period of 2022.
Cash generated from core business operations
Cement makers’ net cash generated from operating activities increased to N617.39 billion in the nine months of 2023 from N443.12 billion in the same period of 2022.
Dangote Cement’s net cash generated from operating activities rose to N460.32 billion from N302.01 billion. Lafarge Africa’s net cash flow generated from operating activities increased to N19.41 billion from N11.2 billion.
BUA Cement’s net cash flow generated from operating activities stood at N137.66 billion from N129.91 billion
Cash and cash equivalents
Cement makers’ cash and cash equivalents stood at N617.16 billion in nine months of 2023 from N198.31 billion in the same period of 2022.
Dangote Cement’s cash and cash equivalents surged to N304.15 billion from N86.85 billion. Lafarge Africa’s cash and cash equivalents increased to N154.64 billion from N80.7 billion.
BUA Cement’s stood at N158.37 billion from N30.76 billion during the period reviewed.
Foreign exchange loss
Cement makers’ foreign exchange loss rose to N135.37 billion in nine months of 2023 from N78.62 billion in the same period.
Dangote Cement exchange loss on foreign-denominated transactions of N99.02 billion from N72.39 billion. Lafarge Africa’s net foreign exchange loss stood at N9.42 billion from N967.29 million.
BUA Cement’s net exchange loss rose to N26.93 billion from N5.26 billion.
Impairment charge
Cement makers’ impairment charge summed up to a negative of N133.31 billion in nine months of 2023 from a positive of N651.86 billion in the same period of 2022.
Dangote Cement’s impairment of financial assets stood at a negative of N424 million from a positive N360 million. Lafarge Africa’s impairment reversal on receivables stood at a negative N8.91 million from a positive N43.65 million.
BUA Cement’s amortisation and impairment of intangible assets stood at N299.6 million from N248.21 million.
Earnings per share
Dangote Cement’s basic earnings per share stood at N16.08 from N12.41.
Lafarge Africa’s earnings per share amounted to N2.44 from N2.79
BUA Cement’s earnings per share amounted to N2.25 from N2.19
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