[EXCLUSIVE] Dangote Cement, BUA lost N640bn in market value in Q1, Lafarge gained
Two of Nigeria’s biggest cement producers posted stock losses in the first three months of this year as N640 billion was wiped off their combined market capitalisation, according to data compiled by Markets Reporters.
The shares of Dangote Cement Plc and BUA Cement Plc fell by 12.21 percent and 4.98 percent respectively in the first quarter of 2021, erasing from each firm’s market value N510 billion and N130 billion.
Market capitalisation — or market cap — refers to the total value of a company’s shares of stock. It is calculated by multiplying the current share price by the total number of outstanding shares.
Dangote Cement, the country’s biggest listed company, saw its market cap fall to N3.66 trillion on Mar. 31 from N4.17 trillion at the end of last year as its share price dropped to N215 from N244.90.
The company had in January announced the completion of the first tranche of its share buy-back programme, which was announced on December 21, 2020. A total of 40.2 million of its shares were repurchased, representing 0.24 percent of the company’s issued and fully paid ordinary shares.
BUA Cement’s market value declined to N2.49 trillion as of Mar. 31 from N2.62 trillion at the end of 2020 as its share price fell to N73.50 from N77.35.
Lafarge Africa Plc, the third-largest cement producer by market cap, boosted its market value to N355.98 billion at the end of Q1 2021 from N339.07 billion on Dec. 31, 2020.
Its share price rose to N22.10 on Mar. 31 from N21.05 at the end of last year, according to the Nigerian Stock Exchange.
Analysts at the Lagos-based Financial Derivatives Company Limited said in a February report that the Nigerian cement industry had experienced substantial growth over the past few years.
“With a population of about 200 million people and a population growth rate of approximately three percent per annum, the demand for and consumption of cement is expected to increase,” the FDC analysts, led by Mr Bismarck Rewane, said.
They said increased government infrastructural projects and maintenance, coupled with urbanisation growth, would likely drive the growth of the market.
The demand for cement is driven by infrastructure, commercial and residential real estate development, according to them.
“The government, especially at the federal level, is usually the major driver of cement demand in Nigeria with an estimated 50 percent of total cement consumption,” the analysts said. “The frequency of road and bridge reconstruction as well as rehabilitation of social infrastructure emphasises the government’s continued patronage of the industry.”
They said the increase in government expenditure on infrastructure would also spur private construction.
The cement industry, according to the analysts, is expected to post an impressive performance in 2021, driven by the anticipated W-shaped recovery of the Nigerian economy and faster global economic growth.
