Dangote Cement Plc, a leading cement company majority owned by Africa’s richest man Aliko Dangote, is finding it hard to outdo its performance last year, with profits falling by double digits at the end of the first nine months of its current fiscal year due to lower demand and surging energy costs.
The group’s recently published financial statement for the nine-month period of its 2022 fiscal year revealed that its profit dropped by 23.4 percent to N213.1 billion ($486.5 million) from N278.25 billion ($635.2 million) the previous year, as rising energy and distribution costs bite into its earnings.
The drop in earnings, despite a 15.2-percent increase in revenue from N1.022 trillion ($2.32 billion) to N1.177 trillion ($2.7 billion), can also be attributed to an increase in almost all operating expenses, including raw material costs, plant maintenance costs, and staff salaries.
Aside from an increase in direct production costs that exceeded N48 billion ($1.1 billion), Dangote Cement’s earnings were also impacted by an increase in administrative expenses and a rise in selling and distribution expenses that exceeded N212.9 billion ($486.1 million).
As a result of the financial performance, the group’s total assets fell slightly from N2.39 trillion ($5.45 billion) at the start of the year to N2.33 trillion ($5.32 billion) as of Sept. 30, while retained earnings fell from N868.27 billion ($1.98 billion) to N740.32 billion ($1.69 billion).
While commenting on the results, Dangote Cement CEO Michel Puchercos said the group made strides during the period under review, recording a rise in revenue and EBITDA, which drove strong cash generation despite elevated inflation due to an extremely volatile global environment.
He explained that the group’s business model is still strong as a result of the prudent and flexible approach it has taken across its operations and that the cement maker will continue to focus on efficiency to meet market demand while maintaining cost leadership.
To offset the impact of the significant increase in energy costs, Pucheros explained that the cement maker is stepping up efforts to increase the use of alternative fuels and that it has processed 101,553 tonnes of waste so far this year, a 77-percent increase over last year’s figures.