Dangote Cement Plc has announced the completion of its first tranche of the share buy-back program which lasted for two days, from July 17th – 18th 2023.
In the company’s disclosure which was signed by the Head, of Investor Relations, Temilade Aduroja, the total number of shares repurchased was 121,404,714 representing 0.71% of the Company’s issued and fully paid ordinary shares.
The shares repurchased at an average price of N339 was valued at N41.15 billion.
Part of the statement reads:
- “Following the conclusion of Tranche I, the total number of issued and fully paid outstanding shares of DCP amounts to 16,752,154,537.
- The repurchased shares will be held as treasury shares and may subsequently be cancelled. Execution of this Tranche I did not have any material impact on the Company’s financial position”.
Backstory
Recall that Nairametrics reported that Dangote Cement Plc had commenced the Tranche I share back program of 168,735,593 fully paid-up ordinary shares of 50 Kobo each presenting 1% of the entire current issued shares to be repurchased.
The purchase of the shares scheduled was to take place in the open market at the NGX throughout the program.
What this means
A share repurchase reduces the total assets of the business so that its return on assets, return on equity, and other metrics improve when compared to not repurchasing shares.
Reducing the number of shares means earnings per share (EPS) can grow more quickly as revenue and cash flow increase.
One of the reasons for the share buyback is to increase long-term shareholder value. Also, the exercise is expected to support the cement manufacturer’s continuous capital structure and balance sheet optimization process.
This means that repurchasing shares while improving financing and balance sheets efficiency is expected to reduce the cost of capital and enhance investors’ value.
What you should know
Dangote Cement Plc became the most capitalized stock on NGX on the back of a positive reaction to the company’s announcement of the Tranche I shares buyback program.
The share price of the cement giant traded flat on Thursday, July 20th, 2023, to close at N352 per share with a market capitalization of N5.99 trillion.
In its audited financial statement for the year ended 31st December 2022, Dangote Cement declared a profit of N382 billion for the year compared to N364 billion the previous year.
Revenue for the period also improved by 16.9% to N1.618 trillion compared to the N1.384 trillion the previous year.
Cement just like any other product in Nigeria, when Dangote corporation turn out to be the major producer, see for yourself what happens to the consumer as regards to that particular product’s price. I believe in 2017, the price of a bag of cement was 1,750 Naira in some parts of Nigeria. Today the price is probably 5,000 Naira or more in some parts of Nigeria. That’s what monopoly brings to a Nation. Enjoy Dangote Monopoly. Why is it that Dangote company cannot operate in a competitive environment?