Dangote Cement has beat industry expectations once again by growing its profit by 72.70 per cent for the half year ended June 2021.
Details show that the group also raked in profit before tax of N281.25billion in H1 2021 as against N162.85billion in 2020. The company’s profit after tax also surged to N191.63billion, representing a 51 per cent increase over the N126.14billion it had recorded in the corresponding period in 2020.
The highly impressive performance was driven by a surge in revenue attributed to rise in volume of sales. At the close of the period, the Group’s revenue grew 44.8 per cent to N690.5 billion in 2021 from N476.85billion in 2020. While sales rose 26.1 per cent, cost of sales expanded by 36.40 per cent to N276.1 billion.
Looking more critically at the company’s books, its operating expenses however increased by 14.07 per cent to N118.28 billion.
Analysts at CORDROS Securities limited said,
‘’On an annualized basis, the company’s H1-21 EPS is 37.7% ahead of the 2020FY EPS of NGN16.24 and 29.6% above our 2021E EPS forecast of NGN17.26. The growth in EPS was driven mainly by an impressive topline growth and higher FX gains, both of which neutered the impact of elevated cost pressures and the surge in tax charge.’’
The analysts also noted that, ‘’Given the high inflationary and exchange rate pressures in the economy, we are impressed that the company delivered another remarkable performance. We also like that the company has completed its 3MTA Okpella plant in Edo State (to be commissioned in Q3-21). We believe economies of scale associated with the additional capacity will help in shielding EBITDA margins in Nigerian operations from cost pressures emanating from the recent alignment of the official rate to the I & E window rate. We expect upward consensus review to forecasts given the impressive run rate as at H1-21.”
The leading cement maker in the country at the moment, Dangote Cement Plc paid N40.39 billion in taxation to the nation’s treasury from its operational result in the first quarter of 2021, the company said.
In a statement, the cement manufacturer cited its published financial result on Friday, April 30, 2021, stating that the amount is due from corporate tax for the period ended March 31, 2021. Significantly, the taxation amount is 47.3 per cent higher this quarter than the N27.42bn paid in Q1 2020.
Dangote Cement currently pays over N240 million Value Added Tax (VAT) daily to the government, making it one of the biggest private-sector taxpayers, the statement also underscored.
According to the company, it opted to provide funding for the construction of major roads in Lagos and Kogi states. “The roads are the critical Lagos Apapa Port road leading to the old toll gate and the Lokoja-Obajana-Kabba road straddling Kogi and Kwara states.”
According to the report, the company also ramped up its production capacity in the Obajana Line 5 and resumed production at the Gboko plant to meet rising demands.
The firm also increased the total volume of cement sold in Q1 2021 from its Nigerian operations to 4.9 metric tonnes (MT) compared to the 4MT sold in Q1 2020. Its pan-African operations also sold 2.6MT of cement compared to 2.3MT in the first quarter of last year.
Commenting on the financial result, Dangote Cement GMD/Chief Executive Officer, Michel Puchercos, said the company started the first quarter of 2021 on a positive note with N89.7bn profit after tax.
“We took the strategic decision to pause our clinker exports to ensure we meet the rapid volume growth in the Nigerian domestic market. We are improving the output of our existing and new assets and aim to recommence clinker exports in the second quarter.
“Our Pan-Africa operations have reached new heights, with an EBITDA margin of 25.5 per cent and volume growth of 12.8% reported during the quarter.”
Recently, Dangote Cement Plc said it has successfully issued N50 billion Series 1 fixed rate senior unsecured bonds under its new N300 billion multi-instrument issuance programme.
The cement giant noted that the bond recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors despite market headwinds.
The company explained that the proceeds of the bond would be deployed for the company’s expansion projects, short-term debt refinancing and working capital requirements.
“This bond issuance allows us to move a step further in achieving our expansion objectives and will be deployed to projects instrumental in supporting our export strategy while improving our cost competitiveness.
“We thank the investor community for their continued support in the management of Dangote Cement and their successful participation in the bond issuance”.
The notice also stated that the company has registered a programme enabling it to consider different types of fixed income instruments to cater for different types of investors aside the first issuance of a traditional bond under the new multi-instruments programme.
The company disclosed that the bond would be listed on the Nigerian Exchange Limited (NGX) and FMDQ Securities Exchange with Absa Capital Markets Nigeria acting as lead issuing house for the series 1 bond.
The bonds were issued on May 26, 2021 at coupon rates of 11.25 per cent, 12.50 percent and 13.50 per cent for the three tranches.
Also, Stanbic IBTC Capital, Standard Chartered Capital & Advisory Nigeria Limited, United Capital Plc, FBN Quest Merchant Bank, FCMB Capital Markets, Coronation Merchant Bank, Ecobank Development Corporation Nigeria, Futureview Financial Services, Meristem Capital Limited, Rand Merchant Bank, Quantum Zenith Capital and Vetiva Capital Management are joint issuing houses.
Dangote Cement Plc is sub-Saharan Africa’s largest cement producer with an installed capacity of 48.6Mta capacity across 10 African countries. It operates a fully integrated ‘quarry-to-customer’ business with activities covering manufacturing, sales and distribution of cement and maintains a production capacity of 32.3Mta in its home market, Nigeria.