Dangote Cement’s after-tax profit slips to N89bn in Q3 on naira weakness

Dangote Cement, Africa’s largest cement producer, has reported a 9.9 per cent decline in its after-tax profit for the third quarter of 2024 driven by naira weakness.

The cement maker’s after-tax profit fell to N89.2 billion in Q3 from N98.9 billion in the corresponding period of 2023.

Analysts at FBNQuest disclosed that the reduced profitability was driven by a 435.4 per cent increase in net interest expenses, which more than offset double-digit growth in group sales.

Analysis by BusinessDay revealed that the company’s interest expense rose to N97.4 billion, up from N43.3 billion amounting to 84.9 percent of the total finance cost.

Despite the marginal decline in profit, revenue rose by 42 per cent to N800.5 billion, thanks to higher pricing during the period. However, the group’s sales volume declined by 1.9 per cent to 6.7 million metric tonnes (MMT). FBNQuest ina note attributes the marginal decline to demand pressures in the Pan-Africa operations.

The company’s stock started 2024 with a share price of N319.90 as of January 2nd and traded at a share price of N478.8 as of October 25, 2024.

Between July and September 2024, DangCement depreciated by  23.4 per cent, moving from N656.70 as of July 1 to N532.00 as of September 30. Despite this the firm reported market capitalisation amounted to N7.04 trillion, making it one of the most capitalised industrial goods stocks in the NGX.

Further analysis shows that its operating profit in the third quarter (Q3) rose to N207 billion from N128 billion in the same period last year while finance income fell to N4.3 billion from N19.1 billion.

“However, despite the high inflationary environment, the removal of petrol subsidies, and the weakening of the naira, Dangcem’s functional (and reporting) currency, unit volumes for the Nigerian segment rose by +6.6% y/y to 4.2 mmt,” the analyst said.

During the period, the total assets of the company rose to N5.53 trillion, total liabilities rose to N3.37 trillion and the company’s shareholders funds surged to N2.16 trillion.