Dangote Cement has reported a small 6.32 percent expansion in Half-Year (H1), 2024 profit as devaluation, higher inflation, finance costs and selling, distribution expenses crimped profit for the period.
Although revenue rose by 85 percent to N1.76 trillion in the period, cost of goods sold rose by a much higher 117 percent to N833.27 billion in the period.
This combined with selling and distribution expenses of N304 billion (+98% compared to June 2023) and finance costs of N332.5 billion (+104%) led to the slow growth in net income.
Impact of inflation, devaluation
The Dangote Cement Plc Group classified Ethiopia, Ghana and Sierra Leone (where it operates) as hyperinflationary economies in accordance with the provisions of IAS 29, Financial Reporting in Hyperinflationary Economies. This is supported by the three years cumulative inflation in Ethiopia which has reached 100%.
In total, Dangote Cements manufacturing costs increased by 117.5% to N833.3 billion in H1 2024 from N383.1 billion in H1 2023, owing to the steep Naira devaluation which impacted cash cost. A major driver of the increase was fuel and power consumed which increased by 138.7% to N374.8 billion.
The total selling and administration expenses rose by 102.9% to N403.2 billion in H1 2024, driven by the 106.2% increase in haulage expenses due to the significant rise in AGO (Diesel) costs. Inflationary pressure and the devaluation of the naira drove part of this increase.
Net foreign exchange loss of N201.3B from foreign currency obligations reflects the devaluation of the naira from N951/$ at the end of December 2023 to N1,488/$ at the end of June 2024.
Financial highlights
- Group revenue up 85.1% to ₦1,760.1B
- Group EBITDA up 50.3% to ₦666.2B; 37.9% margin
- Nigeria EBITDA up 29.1% to ₦463.6B; 46.8% margin • Pan-Africa EBITDA more than doubled to ₦220.4B; 27.3% margin
- Profit after tax up 6.3% to ₦189.9B
- Earnings per share up 8.4% at ₦11.26
- Net debt of ₦915.7B; net gearing of 42.3%
Operating highlights
- Group volumes up by 3.8% to 13.9Mt
- Rebound in Nigeria volumes, up 10.9% to 9.0Mt
- Exported 14 ships of clinker from Nigeria to Ghana and Cameroon
- Nigeria cement and clinker exports up 55.2% at 568Kt
ESG highlights
- Thermal substitution rate estimated at 10.5% for H1 2024 vs. 7.8% in H1 2023
- Commissioned 11 of the 17 Alternative Fuel Projects across the Group
- Arrival of 300 full CNG trucks for our Nigeria business
Arvind Pathak, Chief Executive Officer, said:
“By leveraging our robust export-to-import strategy, Dangote Cement completed 14 shipments of clinker from Nigeria to Ghana and Cameroon. This effort resulted in a 55.2% surge in our Nigerian exports, underscoring our commitment to fostering African self-sufficiency. Looking ahead, we remain bullish about the growth prospect of the African region, evident in our increased capital investments. We continue to prioritise innovation, cleaner energy transition, and cost leadership towards achieving our vision of transforming Africa and building a sustainable future.”
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