Dangote Cement posts slight profit jump despite record sales as Nigeria’s forex revamp bites

By Abubakar Yunusa

Industrial giant Dangote Cement had little profit to show for its record N950.8 billion half-year sales, which climbed 17.7 per cent compared to a year ago, as its net exchange loss on dollar-denominated transactions more than doubled in blow to margin.

Nigeria’s biggest manufacturer by market value reported a net loss of N113.6 billion on forex-denominated transactions January through June from N40.7 billion one year prior, its unaudited financial report issued on Friday showed.

“Net exchange loss on foreign-denominated transactions is due to material devaluation of the Nigerian Naira in June 2023,” Dangote Cement said in the notes to the document.

“The Naira moved from ₦465/$ at end of May 2023 to close at ₦756/$ in June 2023,” it added.

That triggered a net exchange loss of N116.1 billion resulting from the elevated currency conversion rate for the repayment of the group’s foreign loans and payables in its home market Nigeria.

Dangote Cement, which operates in 10 countries in Africa, turned in more than 90 per cent of the loss in the second quarter alone.

Its fiercest rival BUA Cement, owned by Nigeria’s second-wealthiest person Abdul Samad Rabiu, noted a similar trend in its financials released on the same day. Its own net exchange loss also doubled but, at N2.1 billion, is nothing compared to Dangote Cement, controlled by Africa’s richest man, after which the cement-maker is named.

Cost of sales accelerated 18.8 per cent to N383.1 billion, driven by pressures from the spending on fuel & power consumed.

Helped by a surge in haulage cost, selling and distribution expenses came to N153.2 billion compared to N135.3 billion in the same period of last year.

Profit before tax was down by 9.4 per cent, while after-tax profit inched up by 3.8 per cent to N178.6 billion, strengthened by a lower income tax expense.

The corporation is set to scale capacity by building a new 6-metric-tonne integrated plant in Itori, Ogun State. New grinding plant projects in Ghana and Ivory Coast are close to delivery.

This month, Dangote Cement completed the first tranche of its share repurchase programme, which saw 121.4 million units of its shares bought back in deals worth N41.2 billion.