Nigeria’s largest cement makers, Dangote Cement, Lafarge (WAPCO) and BUA Cement have been able to ride on the storm of the pandemic to deliver impressive performance, thanks to improved sales that pushed up profit.
The three cement makers posted a combined profit of N377.4 billion in 2020, a 14.7 percent increase from the N276.6 billion they reported the previous year.
Revenue from the sales of cement and other building materials grew 14.8 percent to N1.48 trillion in 2020 compared to N1.28 trillion the year before.
“The COVID- 19 induced- lockdown halted building projects and affected the demand for cement in the second quarter of 2020 but as restrictions were lifted in the third quarter, all the cement demand build-up that were not able to materialize during the lockdown poured in,” Mustapha Wahab, an infrastructure analyst at Chapel Hill Denham said.
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“This was responsible for their solid performance in 2020,” Wahab pointed out.
The trio’s cost of sales was up 13 percent to N715 billion in 2020 from N630 billion the year before.
However, gross profit grew 16 percent to N760 billion compared to N650 billion in 2019.
Explaining further, Wahab stated that the significant drop in oil prices affect Federal Government’s revenue greatly so it was not able to implement capital projects and this affected public demand for cement.
However, private demand was so strong that it was able to make up for the reduction in public demand.
He also mentioned that the management of these companies also stated that the low yield environment in Nigeria made it easier for private investors to access cheaper credit and this also fuelled cement demand in 2020.
Dangote Cement
Dangote Cement, Nigeria’s largest producer of cement and the most capitalized firm in the country saw a 38 percent surge in its profit to N276 billion in 2020 compared to N200.5 billion in the previous year.
The cement giant made N1 trillion from sales of building materials and cement from N891 billion in 2019.
Cost of sales grew 15 percent to N438 billion in 2020 from 380 billion the previous year.
As a result of the impressive sales, gross profit rose 17 percent to N596 billion from N511.6 billion the previous year.
The company’s borrowing cost plunged 24 percent to N43 billion from N57.6 billion in 2019.
Dangote Cement’s stock closed 4 percent higher at N215, Tuesday.
Lafarge (WAPCO)
Lafarge Africa saw profit jump 99 percent to N30.8 billion in 2020 compared to N15.5 billion the previous year.
Revenue grew 8 percent to N230.5 billion in 2020 from N213 billion the year before.
The company’s cost of sales rose 4 percent to N163 billion in the year 2020 compared to the previous year when it was N157 billion.
Gross profit jumped 20 percent to N596 billion from N511.6 billion the previous year.
WAPCO’S profit was helped by the 51 percent reduction in borrowing cost to 9.7 billion in 2020 from 20.1 billion in 2019.
WAPCO’S shares closed 0.91 percent higher at N22.25, Tuesday.
BUA
BUA cement saw a 16 percent increase in profit to N70.5 billion in 2020 compared to N60.6 billion in the same period in 2019.
Sales surged 19 percent to N209 billion in the period under review from N175 billion recorded the year before.
However, sales cost jumped by 23 percent to N114 billion in 2020 from N93 billion recorded in 2019.
Despite the rise in sales cost, BUA’S gross profit grew 16 percent to N95 billion in the period under review compared to N82 billion.
BUA’s stock closed flat at N73.50 on Tuesday.
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