Cement companies report N1.709 trillion revenue in Q3

• Cement companies report N1.709 trillion in revenue in Q3
• Analytical breakdown
• cost-saving measures

A total of N1.709 trillion was earned by three cement-listed companies on the NGX during the nine months that ended on September 30, 2022, an increase of 19.68% over the N1.428 trillion the companies reported during Q3 2021.

This information was derived from data found in the cement companies’ unaudited third-quarter financial reports, including those of Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc.

Despite the companies’ struggles with cost, their income increased by 19.68%. According to Nairametrics, these cost pressures resulted from the naira’s depreciation and macroeconomic inflationary pressures, particularly in the domestic market, where the average inflation rate increased to 20.77% between January and September.

In the period under review, the combined profit after tax of the cement businesses fell by 13.66% to N332.014 billion from N384.550 billion in Q3 2021, according to data recorded by Nairametrics. And the reason for this was the rising cost of sales, which ate up a large portion of the profits. The companies’ cost of sales for the first nine months increased by 22.83% to N761.738 billion from N620.128 billion in 2021.

Analytical breakdown

In terms of revenue growth, Dangote Cement Plc continued to lead Lafarge Africa Plc and BUA Cement Plc, according to a detailed examination of the financials.

Revenue for Dangote Cement was N1.177 trillion, up 15.16% from N1.022 trillion in 2021. The company’s profit after tax decreased by 23.41% from N278.250 billion in 2021 to N213.101 billion as a result of the high cost of sales, or cost of goods sold. The cost of sales had increased from N403.388 billion to N483.831 billion, a 19.94% increase, accounting for around 41.12% of the total income.

Revenue for BUA Cement was N262.6 billion, a 40.5% year-over-year increase from N186.9 billion in 2021. The company’s earnings after tax for the reviewed period increased by 12.30% to N74.014 billion from N65.906 billion in 2021. The cost of sales increased by 43.32% from N99.654 billion in 2021 to N142.829 billion during the year under review.

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In addition, Lafarge Africa reported sales of N269.8 billion as of the third quarter of 2022, an increase of 23.08% from the N219.2 billion reported in 2021. The cement company also declared a profit after tax of N44.899 billion during the review period, up from N40.394 billion in 2021, or an increase of 11.15%. The group’s cost of sales for the time period increased by 15.36% to N135.08 billion from N117.09 billion in 2021. 50.06% of the total revenue was absorbed by the cost of sales.

Cost-saving measures

One of the factors influencing the companies’ cost of sales during that time was the high cost of electricity. Dangote Cement and BUA Cement spent N263 billion on fuel over a nine-month period, according to Nairametrics. Since then, businesses have started implementing alternate strategies to reduce energy expenditures.

Dangote Cement’s Chief Executive Officer, Michel Puchercos, indicated that the company is stepping up its efforts to increase the use of alternative fuels in order to counteract the effects of high energy costs.

”So far this year, we have co-processed 101,553 tonnes of waste, representing a 77% increase in 2021. We are on track to commission our alternative fuel feed system at Obajana lines I and V, and Ibese line II in November.
”In addition, we are ramping up our investment in compressed natural gas, CNG, to reduce our AGO usage.”