Cement manufacturing giant, Dangote Cement Plc maintained its upward profitability swing into the third quarter ended September 30 with a pre-tax profit of N105.8 billion. The figure represents an increase of 13.5 per cent over and above figures recorded in the corresponding period for last year.
In the same vein, the company’s sales revenue moved up to N208.3 billion, an increase of 19.8 per cent when compared to the revenue generated during the same period last year.
Gross profit of N130.0billion was up 22.1per cent at a margin of 62.4 per cent (Jan-Sep 2011: N106.5bn, 61.3 per cent). The improvement reflects a mixture of positive and negative influences on margin.The cessation of lower-margin imports and their replacement with locally produced cement has helped to reduce the cost of sales, but the potential gains in margin were largely offset by increased use of furnace oil (LPFO) at higher-than expected levels during 2012.
A statement of unaudited result of performance of the company in the last nine months indicated that cement sales climbed up to 7.7 million tonnes, with all cement sold locally produced.
In spite of these achievements, the company said the third quarter sales were seriously affected by heavy rainfall and flooding but that “margins rising as gas supplies return to normal.
Speaking on the results in Lagos, Chief Executive of Dangote Cement, Devakumar Edwin said lamented that conditions in the third quarter of 2012 were very challenging because of the serious flooding that affected Kogi and Benue states, where two of our plants are located.
“In spite of these problems we have increased sales by nearly 20 per cent in the first nine months of 2012, with sales of locally produced cement rising by nearly 51 per cent. Even in the difficult third quarter we increased shipments by nearly eight per cent during a period in which we estimate the industry increased volumes by less than four per cent, so it is clear we are increasing our market share.
“The gas supply is returning to normal and this will drive an increase in profitability in the second half of the year.”
He added; “We have strengthened our team with key appointments in the regions and with the appointment of a new Chief Financial Officer, Tim Surridge, who has considerable experience of helping organizations improve governance and disclosure.”
Reviewing the cement sub-sector of the construction industry, Dangote cement management said Growth in Building & Construction remains robust. Though slightly down on the 13.25 per cent growth achieved in the first quarter of the year, while the second quarter growth of 12.47 per cent was higher than the 12.24 per cent achieved in the second quarter of 2011.
“Rainfall it stated typically affects second quarter building work. The Building & Construction sector is the economy’s second-fastest growing, behind telecommunications at 29.77 per cent. Road and infrastructure projects funded by all levels of government are the major drivers of growth.”
Dangote Cement is Nigeria’s leading cement producer with three plants in Nigeria and plans to expand in 13 other African countries. The Group is a fully integrated quarry-to-depot producer with an expected production capacity of 19mtpa in Nigeria by the end of 2012, increasing to as much as 35.25mtpa in 2015. The Group plans to build a further 19mtpa of production and import capacity across Africa by 2015.
Dangote Cement’s Obajana plant in Kogi state, Nigeria, is the largest in Sub-Saharan Africa with 10.25mtpa capacity across three lines and a further 3mtpa capacity planned by 2015.
The new 6mtpa Ibese plant in Ogun state, near the key market of Lagos, was inaugurated in February 2012. An additional 6mtpa of capacity is planned for completion by 2015.
The Gboko plant in Benue state has 3mtpa capacity with an upgrade to 4mtpa expected by the first quarter of 2013.
The Group has recently signed a memorandum of understanding for the construction of a new plant of between 3mtpa and 6mtpa capacity in Calabar by 2015.
Through its recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and will soon transform the nation into a net exporter serving other African countries.
Dangote Cement has announced an investment of more than $2.5billion to build manufacturing plants and import terminals across Africa. Current plans are for eight cement plants in Cameroon, Ethiopia, Gabon, Republic of Congo, Senegal, South Africa, Tanzania and Zambia, as well as import/packing facilities in Cote d’Ivoire, Ghana, Guinea, Liberia and Sierra Leone.
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