Dangote Cement’s profit falls 23% as sales decline

Dangote Cement Plc posted a profit decline in the nine months ended September 30, 2022, compared to the same period last year as its sales dropped in Nigeria and other countries.

Africa’s biggest cement producer said its profit after tax dropped by 23.4 percent to N213.1 billion mainly due to exchange losses from the depreciation in the CFA and Ghana Cedi.

Its group sales volumes fell by 6.2 percent to 20.8 million tonnes in the period, according to its financial statements released on Friday.

“Cement demand is sustained by increasing housing infrastructure and commercial construction. Our Nigerian operations sold 13.5Mt of cement and clinker during the period, down 4.7 percent from the 14.1Mt sold in 9M 2021,” the company said.

It said the slightly lower volume, elevated by the high base of the same period of 2021 was due to significant inflation, rising interest rate and energy supply disruptions that impacted production.

It said the energy disruptions were largely due to low gas generation in the country, adding, “Collectively, this negatively impacted our ability to maximize production during the period.”

Dangote Cement said revenues for the Nigerian operations increased by 22.1 percent to N890.7 billion, supported by price increases in the previous year in line with economic realities.

It said the rapidly increasing prices of Automotive Gas Oil, also known as diesel, resulted in a 77.9 percent year-on-year increase in its selling and distribution cost in Nigeria.

The company said it had implemented a robust cost reduction strategy including increased use of alternative fuel to improve its energy mix and the use of Compressed Natural Gas for its trucks in the rising diesel cost environment.

“Our pan-African operations sold 7.4Mt of cement and clinker in 9M 2022, down 9.7% from the 8.2Mt sold in 9M 2021. This is due to the continuous global supply chain disruption and increasing commodity
prices,” the company said.

It said this was exacerbated by a shutdown in its Congo plant for over two months owing to maintenance and repairs, coupled with extended power plant maintenance in Senegal.

“In Cameroon, Ghana, and Sierra Leone freight costs remain substantially elevated, causing volatility in the landing cost of cement and clinker. The total pan-African volume accounts for 35.4 percent of group volumes.”

The Chief Executive Officer, Michel Puchercos, said despite the elevated inflation due to a very volatile global environment, the company has made strides in 2022.

He said, “We recorded increases in revenue and EBITDA that drove strong cash generation across the Group. We recorded revenue of N1.18 trillion, up 15.2 percent compared to last year and group EBITDA of N515.9 billion, up 0.2 percent with an EBITDA margin of 43.8 percent.

“To mitigate the impact of significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels. So far this year, we co-processed 101,553 tonnes of waste representing a 77 percent increase over 9M 2021. We are on track to commission our Alternative Fuel feed system at Obajana lines I and V; and Ibese line II in November.”

Dangote Cement said it had commissioned its power plant at Okpella and “are progressing well to deploy grinding plants in Ghana and Cote d’Ivoire”.

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