Three cement companies quoted on the Nigerian Exchange (NGX) raked in N1.183 trillion in revenue during the half year ending June 30, 2022, a 23.25% growth over N959.84 billion reported in 2021. This is despite the high inflation environment and currency devaluation. The cement firms include Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc.
Inflation rate increased to 18.60% as at end of June 2022, the highest in 11 months due to increased food costs, supply chain disruptions, the depreciation of the naira, insecurity, and deteriorating infrastructure.
According to data tracked by Nairametrics, profit after tax of these companies stood at N270.88 billion from N263.345 billion in 2021 representing a marginal 2.86% increase. This was due to the rising cost of sales which swallowed much of the earnings following rising inflation and high exchange rate. Cost of sales for the firms stood at N510.452 billion for the half year 2022 as against N439.247 billion in 2021, accounting for a growth of 16.2%.
Breakdown of the analysis
A cursory look at the financials showed that with about 14,206,000 tonnes sales volume in H1 2022 from 15,277,000 tonnes reported in H1 2021, Dangote Cement maintained the lead in revenue generation, followed by BUA Cement and Lafarge Africa Plc.
- Dangote Cement reported revenue of N808.037 billion from N690.545 billion in 2021 representing a growth of 17%. Following high cost of sales, Profit after tax declined by 10.19% to N172.104 billion for the half year 2022 as against N191.630 billion in 2021. Cost of sales grew by 16.78% to N322.461 billion from N276.115 billion.
- BUA Cement recorded revenue of N188.562 billion in H1 2022, representing an increase of 51.7 per cent over N124.3 billion reported in H1 2021. Profit after tax was N61.364 billion in 2022 as against N43.396 billion in 2021, accounting for an increase of 41.4% while cost of sales stood at N97.504 billion in half year of 2022 from N66.158 billion in 2021, representing a growth of 47.38%.
- Also, Lafarge Africa announced N186.6 billion revenue in H1 2022 from N146.02 billion recorded in H1 2021, representing an increase of 29 per cent. The cement firm reported N37.411 billion in profit after tax during the review period from N28 billion posted in 2021, amounting for a growth of 32.08%. the group’s cost of sales for the period stood at N90.515 billion from N72.538 billion in 2021.
What the companies are saying
The Group Managing Director, Dangote Cement Plc, Michel Puchercos said one of the biggest challenges the company faced in 2021 was the increased inflationary pressure across cost lines.
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- Puchercos said: “We experienced a significant increase iour energy costs and spare parts. Some of these cost pressures were due to the depreciation of the Naira while others were due to macro-economic inflationary pressure, especially in our domestic market Nigeria where average inflation was at 16.95% in 20921.
- Nevertheless, we closely monitored all our cost lines and working capital needs through our disciplined cost control measures. Our plant efficiency initiatives, high productivity of the new assets deployed, and better-fixed cost absorption across the group enabled the offsetting of inflationary pressures on most of our cost lines.
- We experienced supply challenges and increased sea freight costs which resulted in the volatility in the landing cost of clinker and cement. Countries importing clinkers such as Cameroon and those importing cement such as Ghana and Sierra Leone faced challenges due to freight prices and material price volatility”,
BUA Cement Plc said that it is contemplating capital raising for capacity expansion of BUA Cement’s integrated cement plant in Kalambaina, Sokoto State, Nigeria which shall include increasing its capacity from 2.0 million tons per annum (MTPA) to 8.0 MTPA.
- According to a statement obtained from NGX, the company said “In furtherance of our disclosure obligations pursuant to Chapter 17 of the Rulebook , BUA Cement Plc hereby notifies Nigerian Exchange Limited (NGX), its esteemed Shareholders and the investing public that the Company has gone into discussion with the International Finance Corporation (IFC), serving as lead arranger in conjunction with a number of other lenders in a syndication pool, to obtain a loan for the expansion of BUA Cement’s integrated cement plant in Kalambaina, Sokoto State, Nigeria”.
Khaled El Dokani, CEO of Lafarge Africa, commented: “Our Q2 2022 performance shows significant improvement over Q2 2021, with net sales of +30.5%, recurring EBIT of +12.8% and net income of +3.5%.
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- Our H1 2022 results are even more impressive, with 28.7% and 32.1% growth in net sales and net income, respectively. This further confirms the consistent resilience and robustness of our business.
- We are equally pleased with the progress we are making on sustainability; our use of affordable clean energy and agroecology footprint are in accordance with our net zero pledge journey.
- H2 2022 outlook the company said: “positive demand momentum expected in H2 2022. We will continue to maximize volume opportunities across our markets and actively manage our costs. We remain focused in our drive towards sustainability.”