Dangote Cement reported a profit after tax of N200 billion representing a massive 49% drop in profits from a year earlier. The drop in profits was mostly driven by stunted growth in its local and Pan African businesses.
Segment performance
Nigeria: The cement giant reported revenues of N610.2 billion in 2019 compared to N618.3 billion a year earlier. Profit after tax was N275.1 billion in 2019 compared to N491.6 billion in 2018. EBITDA, a notable performance measure for institutional investors was N361 billion down from N397 billion placing operating expenditure as the major drivers of profitability drop.
Pan Africa: The cement giant reported revenue of N891.7 billion compared to N901 billion a year earlier. Revenue from business outside Nigeria was N282.7 billion compared to N283.2 billion a year earlier. However, it continued to report losses from its Pan African business with a loss after tax of N85.2 billion compared to N87.8 billion in losses.
Border closure to blame: A report from Reuters revealed Dangote Cement blamed the border closure for affecting exports to other African countries thus hurting top and bottom-line growth. Outgoing Dangote Cement CEO, Joseph Makoju reportedly blamed border closure for leading a drop in exports from 0.7 million tonnes in both 2018 and 2017 to 0.5 million tonnes in 2019.
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“We undoubtedly faced several challenges last year,” Makoju told an analyst call. “We are very optimistic about the market in 2020 and we expect to see some increase especially for infrastructure project.” Joseph Makoju.
Joseph Makoju also said total production volumes last year were flat at 14.1 million tonnes and that Higher discounts, marketing and haulage cost caused core profit to fall 9.1%, while margins slid 59.2%, he said.
Dangote Cement had before now reported only one profitability drop in 2016 when Nigeria fell into a recession. Profits went from N153.2 billion in 2015 to N142.2 billion in 2016. The company bounced back in 2017 and 2018 with profits of 204.2 and N390 billion respectively. 2019 is the first time Dangote Cement in reporting a revenue drop since we started tracking its results in 2011.