JUST IN: Despite Harsh Operation Cost, Cement Makers Post Huge Profits

Despite Harsh Operation Cost, Cement Makers Post Huge Profits

Despite the harsh economic challenges marked by rising operational costs, listed cement companies on the Exchange (NGX) Limited defied the odds, posting substantial gains.

Cement companies were faced with economic headwinds in the first quarter (Q1), 2023 (cash crunch and general elections) and the heavy rainfall in Q3, 2023 negatively impacted the sales volume of cement manufacturers in .

This coincided with the liberalisation of the , lingering FX illiquidity constraints, all-time high inflation rate, and rising operating costs and culminated in a lower-than-expected operating performance in the review period.

Major players like Dangote Cement, BUA and Lafarge reported significant profit surges and even declared whopping N609.549 billion dividend payouts to shareholders for the financial year ended December 31, 2023, LEADERSHIP learnt.

The financial statements of Dangote Cement, BUA Cement and Lafarge for 2023 showed a revenue growth of 30.75 per cent to N3.074 trillion from N2.35 trillion in 2022. Dangote Cement declared a revenue growth of 36 per cent to N2.21 trillion from N1.618 trillion.

BUA Cement saw its revenue increase to N459 billion from N360 billion in 2022 and Lafarge Africa's revenue rose to N405 billion from N373 billion.

The three companies posted a combined profit before tax of N701.027 billion, lower than N713.901 billion declared in 2022, as a of BUA Cement profit decline.

BUA Cement posted a decline in its pre-tax profit, by 44.05 per cent to N67.228 billion from N120.154 billion in the previous year.

Dangote Cement declared a pre-tax profit of N553.104 billion as against N524 billion in 2022, a gain of 5.55 per cent, while Lafarge Africa's profit before tax rose by 15.7 per cent to N80.695 billion from N69.745 billion in 2022.

In the beginning of 2024, the price of cement was on the rise. The retail price of cement rose from N5,000 in December, 2023 to about N10,000 before coming down to N7,000 per , depending on the location in the country.

Dangote Cement, in line with its dividend policy, a final dividend of N511.215 billion, representing N30 per share. BUA Cement, on the other hand, declared a final dividend of N2.00 per share, amounting to N67.729 billion, while Lafarge Africa proposed a final dividend of N1.90 per share, amounting to N30.605 billion.

The dividend payments are a 30.3 per cent increase in 2023, compared to the N467.85 billion the companies paid to shareholders in the 2022 financial year.


In 2022, Dangote Cement paid N20 final dividend per share. BUA Cement paid N2.80 dividend per share, while Lafarge Africa declared N2.00 dividend per dividend.

Recently, the summoned Dangote, BUA and other cement manufacturers over what it described as arbitrary increase in the price of cement in the country.

On the increase in the price, stakeholders noted that “in 1995, Raw Materials Research and Development Council (RMRDC) made a presentation to the federal government on cement production in Nigeria. The major raw materials required in cement production are limestone and gypsum.

“We recommended to the federal government that these raw materials, limestone and gypsum, are available in Nigeria. The cement companies import gypsum. The government accepted RMRDC's recommendation and then the importation of gypsum was banned. Unfortunately, gypsum is now imported. It is the high cost of imported gypsum that is causing the high cost of cement.”



Speaking on the companies' performance, chief research officer, InvestData Consulting Limited, Mr. Omordion Ambrose said the 2023 performance of these companies are impressive and their dividend returns more attractive when compared to yields on money market instruments.

He noted that these companies over the years have been consistent in dividend payout to shareholders.

From shareholders' perspective, chairman, Progressive Shareholders Association (PSAN), Boniface Okezie, stated that despite economic , the cement companies listed on the NGX have reported impressive performance.

According to him, there is resilience in the corporate which means there is hope for the domestic economy.

Analysts at CardinalStone said: “In 2024, the Nigerian cement industry is expected to benefit from renewed government focus on infrastructure development and construction projects, which could stimulate demand for cement products.

“With increased budget allocations to critical sectors and ambitious infrastructure initiatives (N1.32 trillion to infrastructure, which represents 5.0 per cent of the total FG 2024 budget), the construction industry is likely to experience a resurgence.

“Cement manufacturers, in response, are beginning to recalibrate their production strategies in the form of capacity expansion and improved efficiency to meet the anticipated rise in demand. While challenges may persist, the outlook for Nigeria's cement industry in 2024 is one of cautious optimism, with potential growth opportunities emerging amidst the recovery phase.”



Speaking on 2023 results, Group managing director, Dangote Cement, Arvind Pathak said: “This positive full-year outcome is a combination of the strength in the diversity of our operations across Africa and our sustained drive to contain cost amidst an accelerating inflationary environment.”

He added that, “despite the challenging macroeconomic conditions, 2023 was yet another testament to the effectiveness of our diversification strategy. Our diverse operations acted as a cushion, providing resilience to country-specific risks.”

On his part, managing director/ CEO, BUA Cement, Yusuf Binji said corroborated that the operating environment in 2023 was challenging, given the different headwinds confronted at the start of the year and especially with the devaluation of the naira.


“During the year, we launched the maiden edition of the BUA Cement Scratch and Win promo, among other initiatives, which saw BUA Cement further increase its share of the market and resulted in a 27.4 per cent rise in revenues to N460 billion from N361 billion in the prior year.

“We could commission the new 3mmtpa lines at the Sokoto and Obu Plants, activate a new 70MW gas power plant in Sokoto and eagerly await the activation of the 70MW gas power plant at Obu during the first quarter of 2024. Apart from these, we took delivery of over 500 trucks to support our distribution activities, which further deepened our market presence.

“We believe these investments further reinforces our purpose, which is to be a highly competitive leader in Nigeria, as we address not only the housing and infrastructure needs in a sustainable manner, but also seek out innovative ways to make cement affordable,” he added.

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