The three major cement producers in Nigeria raked in a sum of N2.35 trillion as turnover in 2022, surpassing the N1.93 trillion recorded in the previous year by 21.6%. This is according to data compiled by Nairalytics, the research arm of Nairametrics.
According to the compilation from their respective audited financial statements for the year 2022, they printed a collective profit after tax of N536.9 billion in the review year, in contrast to the N505.5 billion recorded in the prior year.
The impressive growth in their top and bottom lines is despite the economic headwinds in the country, which disrupted the business environment, ranging from the FX crisis, rising energy prices, and wilted disposable income of citizens, amongst others.
The companies considered in this article are Dangote Cement, BUA Cement, and Lafarge Africa.
A surge in revenue despite the drop in volume: It is worth noting that the increase in their sales revenue was largely due to the increase in the price of cement products during the period as sales volume dropped in contrast to the previous year.
- For example, Dangote Cement sold a total of 27.77 million tonnes of cement in 2022, 5.1% lower than the 29.27 million tonnes that were sold in the preceding year, yet revenue from the sale of cement production increased by 17%.
- The decline in customer purchases was on the back of rising inflationary pressure in the country, which had risen to record levels during the year.
- In a bid to maintain favourable margins, cement-producing companies as well as other organizations in the manufacturing industry transferred the cost to the customers by increasing the selling price, contributing to a significant increase in sales revenue for the year.
More on the numbers: A breakdown of the numbers showed that the companies collectively incurred a sum of N1.04 trillion in 2022 as cost of goods, representing a 23.9% increase when compared to the N837.9 billion spent in the prior year, in line with high inflation numbers.
- The surge in cost of sales constrained the growth of the gross profit, limiting it to a year-on-year growth of 19.9% at N1.31 trillion from N1.09 trillion in the previous year.
- In the same vein, the gross profit margin, which measures the gross profit in relation to the total revenue generated dropped to 55.9% in 2022 from 56.7% recorded in the year before.
- Also, the rising cost of operation and energy prices amongst others left the net profit growth at 6.2% year over year to N536.97 billion in 2022.
Sectoral performance: A cursory look at the Gross Domestic Product (GDP) report from the National Bureau of Statistics (NBS), shows that the cement industry grew by 5.65% in reals terms in 2022, a slow growth when compared to the 6.64% printed in the previous year.
- The cement manufacturing sector was valued at N695.8 billion, accounting for 0.93% of the aggregate GDP in the review period. It contributed 0.8% to the GDP in the year before.
- In terms of nominal GDP, the sector was valued at N6.26 trillion in 2022.
How they performed: Dangote Cement recorded the highest revenue from the pool with N1.62 trillion, representing 68.8% of the total income earned by the three companies. Dangote Cement was able to grow its revenue by 17% year over year from N1.38 trillion printed in the previous year.
- Further breakdown showed that Dangote Cement saw its cost of goods increased by 20.3% to N662.9 billion, while gross profit stood at N955.4 billion. Meanwhile, profit after tax increased marginally by 4.9% year-on-year to N382.3 billion.
- Lafarge Africa recorded N373.2 billion in revenue in 2022, a 27.3% increase from N293.1 billion recorded in 2021. The cost of sales stood at N177 billion, while profit after tax was N53.65 billion for the period.
- BUA Cement in the same vein grew its revenue by 40.3% from N257.3 billion recorded in 2021 to N360.9 billion in 2022. However, the cost of sales increased by 45.1% to N197.9 billion, cancelling out the impressive gains recorded in terms of revenue growth.
- BUA Cement posted N101.01 billion as profit in the period under review.
