Dangote Cement Profit Jumps as Higher Prices Lift Revenue

LAGOS (Capital Markets in Africa) – Dangote Cement Plc, Africa’s largest producer of the building material and Nigeria’s biggest company, said first-half profit surged as an increase in revenue offset lower volumes and operations in the rest of the continent helped bolster sales.

Net income rose 35 percent to 143.5 billion naira ($447.7 million) in the six months through June, compared with 106 billion naira a year earlier, the Lagos-based company said in a statement on Friday. Revenue increased 41 percent to 412.7 billion naira, which helped to offset an 11.3 percent fall in cement volumes, it said.

Dangote Cement, controlled by Africa’s richest man Aliko Dangote, said in February it would focus on profit growth, margin and cost controls in 2017 as an economic contraction in Nigeria weakened demand. The company increased prices last year as manufacturing costs climbed 60 percent.

Nigerian companies, including Dangote, are battling an economic downturn in Africa’s most populous nation as a decline in the price and output of oil, the country’s main export, led to foreign-exchange shortages and a slump in economic activity. Problems with power supply arising from sabotaging of gas pipelines my militant groups in the Niger River delta also increased costs.

Dangote Cement is switching to cheaper fuels such as coal from low-pour fuel oil to help reduce costs and improve profit margins, the company said in April.

“Our revenues have continued to grow despite the lower volumes seen in Nigeria,” Chief Executive Officer Onne van der Weijde said in the statement. “We are using much more gas and increasing our use of coal mined in Nigeria, thus reducing our need for foreign currency.”

Dangote Cement has an annual production capacity of almost 46 million tons at plants in Nigeria and at least nine other African countries. The company said last month it may shut its 2.5 million-ton Ethiopian plant if it fails to reach a resolution with authorities over mining disputes.

The company’s shares fell 4 percent, the most in more than one month, to 235.51 naira at the close of Friday’s trading on the Nigerian Stock Exchange in commercial capital, Lagos.