Dangote Cement Plc, the cement business of Nigerian billionaire industrialist Aliko Dangote, has reported a double-digit decline in profit in the first half of 2022, owing to higher energy costs and unrealized foreign exchange losses.
According to the group’s recently published financial results, its profit decreased by more than 10 percent in the first half of 2022, falling from N191.63 billion ($460.8 million) in the first half of 2021 to N172.1 billion ($413.8 million). The decline in its profit comes despite a 17-percent increase in its revenue from N690.55 billion ($1.66 billion) to N808.03 billion ($1.94 billion).
The group’s earnings were hit by an increase in selling and distribution expenses, as well as a jump in direct production costs driven by energy costs in addition to an unrealized foreign currency loss of N40.66 billion ($97.8 million).
Dangote Cement CEO Michel Puchercos stated that the group’s first-half performance was positive despite high inflation due to a volatile global environment, with significant growth in revenue and EBITDA driving solid cash creation across the board.
While providing more insight into the drop in the group’s earnings and why the production volume fell during the first half period, Pucheros said a significant increase in energy and AGO costs impacted production for the period. However, he assured investors that the group will strengthen its efforts to increase the use of alternative fuels.
Looking ahead, the CEO of Dangote Cement said the group’s business model remains robust as a result of the prudent and flexible approach that it has taken throughout its operations.
He added that the management’s continuous focus will remain on efficiency, meeting market demand, and maintaining cost leadership in line with its commitment to delivering superior profitability and value to shareholders.
Investors on the Nigerian Exchange pulled down interest in the cement powerhouse in response to the double-digit decline in earnings, contributing to a 6.8-percent drop in the group’s share price at lunchtime, from N265 ($0.637) to N248 ($0.596).
If the price level remains unchanged until the end of business today, Dangote, Africa’s richest man, will see his net worth plummet once more, adding to the $700-million decline in his net worth in July.
