Dangote Cement Profit Jumps on Lower Fuel Costs in Nigeria

LAGOS (Capital Markets in Africa) – Dangote Cement Plc said nine-month profit surged 45 percent as Africa’s largest producer of the building material lowered fuel costs in its home market of Nigeria.

Net income rose to 193 billion naira ($537 million) from 134 billion naira a year earlier, the Lagos-based company said in a statement on Thursday. Revenue increased 37 percent to 604 billion naira.

Dangote Cement, controlled by Africa’s richest man Aliko Dangote, is cutting costs and boosting profit margins in Nigeria by switching to cheaper fuels such as locally produced coal. A 2014 plunge in the price of oil caused a scarcity of dollars and led to a weaker naira in its home market, causing costs to rise for manufacturers.

The economy has now started to pick up. An expansion of 0.55 percent in the three months through June ended five straight quarters of contractions.

An improvement in the “fuel mix” in Nigeria has helped increase margins across the group, Chief Executive Officer Onne van der Weijde said in the statement. “Our pan-African operations are performing strongly with excellent sales growth in Cameroon, Ethiopia and Senegal.”

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 this month abandoned a proposal to take over PPC Ltd, South Africa’s largest cement maker.

Source: Bloomberg Business News