Dangote Cement Plc has released its Q3 2018 result with an Earnings Per Share (EPS) growth of 1.6% Year on Year to N2.64.
In the result breakdown by investment house, ARM Securities, Dangote Group’s revenue grew by 6.3% Year on Year to N202.9 billion driven by higher volumes in Nigeria and the Pan African businesses, despite relatively softer prices across markets.
Starting off with Nigeria, while the business recorded price erosion of 3.9% Year on Year to N43,187 per tonne, sales volume grew 6.2% Year on Year to 2.5metric tonns, thus removing the moderation in price to record revenue growth 2.01% Year on Year to N127.2 billion. While for the rest of Africa, volumes grew by 15.9% Year on Year to 2.5metric tonns reducing the effect of a 1.4% decline in average prices to N30,728 per tonne driving the revenue higher by 14.3% Year on Year to N75.6 billion.
However, input cost grew at a much faster pace (+9.46% Year on Year to N90.1 billion) boosted by higher salaries and depreciation expense. Salaries and related staff costs rose by 39.4% Year on Year to N8.7 billion while depreciation expense rose by 13.8% Year on Year to N16.2 billion moderating the impact of declines in energy cost per tonne (8.9% Year on Year N4,860) and materials consumed per tonne (7.1% Year on Year to N5,674). Consequently, gross margin contracted by 1.3% Year on Year to 55.6%.
Elsewhere, operating expense grew by 19.1% Year on Year to N48.4 billion, driven by higher haulage and depreciation expenses. Particularly, haulage cost per tonne in Nigeria rose 44.4% Year on Year to N4,541. As a result, OPEX to sales grew to 23.9% (+2.6% Year on Year). The depressed margins coupled with higher operating expense drove operating income lower by 4.7% Year on Year to N66.3 billion with respective margin at 32.7% (-3.8% Year on Year).
Further down, net finance cost moderated by 10.4% Year on Year to N4.5 billion hinged on a decline in both its finance income and cost. For clarity, finance income declined by 32.9% Year on Year to N7 billion, while the finance expense declined by 25.6% Year on Year to N11.6 billion.
A feed through of the pressure from its input and operating cost drove PBT lower by 4.3% to N61.8 billion. However, the lower tax reported in the period (-17.2% Year on Year to N16.7 billion) after restating its Q3 17 tax, drove PAT higher by 1.59% to N45.1 billion. For context, effective tax rate dropped to 27.0% (vs 31.2%)