Dangote Cement’s annual sales touch record N1.6trn

Cement Dangot reported an increase in its bottom line for 2022 as net profit fell to single digits from up to 32 percent in the previous year.

Although the growth was affected by headwinds from operational costs and the urgency to commit part of the revenue for expansion, the revenue for the year under review came to N1.6 trillion from N1.4 trillion, a jump of 17 percent.

The need for scale means that sub-Saharan Africa’s largest cement producer is investing more funds amounting to N249.3 billion in twenty-five subsidiaries, mostly outside Nigeria, rather than allowing cash to increase profits.

Independent auditor KPMG highlighted the development in a report accompanying its audited financial statements released on Monday, stating that some of its units are “currently loss-making and dependent on financial support” from the group.

The industry giant recorded stronger revenue despite a decline in sales volume, product price hikes to increase turnover.

Overall, 27.8 million tons of cement and clinker were sold compared to 29.3 million for the previous year.

Administrative expenses rose quarter-on-quarter to N79.9 billion, mainly driven by labor costs.

Dangote Cement earned N295.2 billion in selling and distribution expenses, which increased by more than half, reflecting the weight of transportation costs in the business in its home market of Nigeria, where logistics costs are one of the highest in the world.

Profit before tax fell by 2.7 percent to N524 billion as cash allocated to debt servicing through financial charges almost doubled.

But profit after tax improved, buoyed by lower income tax charges, rising to N382.3 billion from N364.4 billion.

Shareholder payments

Meanwhile, the company said it will keep the same amount paid to shareholders in the fiscal year 2021 to 2022.

The company announced in its audited annual report that it will pay a dividend of N20 per share for 2022, retaining the payout rate for 2021 while declaring a total of N340.8 billion.

The directors “consider the necessary capital to finance the company’s operations and expansion plans,” the document said, on top of having to raise cash prizes for shareholders.

The share price showed no upward movement at the end of trade in Lagos, which had a quote of N272 per unit, which may mean that the announcement is not good news for equity investors.

Subject to withholding tax, the dividend proposal awaits shareholder approval at Dangote Cement’s upcoming annual general meeting, with the qualifying date set for March 30.

Also read: Dangote, Sinoma sign agreement on new cement plant in Ogun

“On April 14, 2023, dividends will be paid electronically to shareholders whose names appear in the Register of Members on March 30, 2023,” the company said elsewhere.

The company is setting up a new cement plant in Itori, Ogun State, expected to add 6 million tonnes to its current nameplate capacity of 51.6 million tonnes per annum.