Dangote Cement profit up 51.9% to ₦191.6B; volume sales in Nigeria up 33.2%

Dangote Cement
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The Dangote Cement generated record volume sales, with a total 7.76mt of cement sold in Q2 2021. Volume sales in the Nigerian market stood at 4.96mt, representing a 46% YoY increase from 3.39mt in Q2 2020. Volume growth in the Nigerian market was driven by strong private sector demand, associated with post-lockdown economic recovery.

Dangote cement’s strong volume growth was further magnified by the lower volumes in Q2 2020 due to the impact of COVID-19. When looking at the domestic sales alone, the company’s Nigerian operations sold 9.5Mt, up 28.3% year on year.

From the results obtained by Brand Spur, Dangote cement’s revenues for its Nigerian operations increased by 48.7% to ₦494.1B. The company recorded higher realised prices compared to the same period last year owing to lower rebates and higher recovery in transportation costs.

Dangote cement
Source: Dangote Cement

Michel Puchercos, Chief Executive Officer, said:

“We are pleased to report a solid set of the results for the first half of the year. Our performance reflects the strong demand across the Group, with increases in revenue and
profitability, compared to the same period last year. This strong intrinsic performance is magnified by the lower Q2 2020 results due to the effect of COVID-19. The growth trend
continues, and we are focused on meeting the strong market demand across all our countries of operation.”

The cement manufacturer recommenced clinker exports to Cameroon from both Onne and Apapa terminals. Dangote exported two ships with a total volume of 57Kt, while it exported 342Kt of cement by road in H1 2021. Lastly, the 3Mt Okpella plant in Edo State is on track to be commissioned in the third quarter of this year.

In FY 2020, Dangote cement expanded capacity with Obajana Line 5 that came on stream. Therefore, the increased demand from housing infrastructure and commercial construction was met with higher output. In addition, a low base magnified the volume growth in Q2

Dangote Cement

Dangote cement also realised a higher average price, on a year-on-year basis (+14% YoY to N51.29k per ton). Overall, revenue from the Nigerian market grew by 66% YoY to N254.46bn in Q2 2021, from N153.04bn in Q2 2020.

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“In addition, Dangote Cement became the first Nigerian listed company to report its financial results using XBRL format with the IFRS taxonomy. We believe that adopting XBRL reporting will strongly benefit Dangote Cement’s existing and potential investors. It represents another step in our continuing efforts to modernise and enhance the transparency of, and access to, companies’ disclosures.”, stated Michel Puchercos.

In general, manufacturing costs increased by 36.4% from ₦202.4B in H12020 to ₦276.1B in H1 2021 This was mainly a result of an increase in volumes in both Nigeria and Pan-Africa. Materials consumed increased by 46.7% to ₦94.0; while fuel & power consumed increase by 53.5% to ₦99.0B. Both increases were a result of volume growth and inflationary pressures on our costs.

Total selling and administration expenses only rose by 14.1% to ₦118.3B in H1 2021 mainly from higher haulage expenses and other general administrative expenses. Inflationary pressure and the foreign currencies conversion to Naira is driving part of this

Group earnings before interest, tax, depreciation, and amortisation (EBITDA) in the first half increased by 61.0% to ₦351.1B at a margin of 50.8% (H12020: ₦218.1B, 45.7%) as a result of increased performance in both Nigeria and Pan-Africa. This strong performance is magnified by the lower Q2 2020 results due to the effect of COVID-19.

Excluding eliminations and central costs, Nigeria EBITDA increased by 60.1% to ₦311.2B at a margin of 63.0% (H12020: ₦194.4; 58.5%). Strong revenue realisation, improved fixed cost absorption and high efficiency of the new assets deployed to compensate for the inflationary pressure on variable and fixed costs.

Pan-African EBITDA increased by 49.8% to ₦47.2B, at the margin of 23.8% (H12020: ₦31.5B; 21.7%), driven by increased volumes in all our countries of operations apart from Senegal which is already operating at full capacity.

Operating profit of ₦302.2B was 74.2% higher than the ₦173.5B for H1 2020 at a margin of 43.8% (H12020: 36.4%).