Dangote Cement Profit Rises as Price Gains Offset Lower Volumes

LAGOS (Capital Markets in Africa) – Dangote Cement Plc, Africa’s largest producer of the building material and Nigeria’s biggest company, said first-quarter profit rose 34 percent as a price increase offset lower volumes sold and operations on the rest of the continent helped bolster sales.

Net income increased to 70.6 billion naira ($220 million) in the three months through March, compared with 52.8 billion naira a year earlier, the Lagos-based company said in a statement on Friday. Revenue increased 48 percent to 208.2 billion naira, as volumes declined 6 percent to 6.03 million metric tons of cement.

Dangote Cement raised cement prices in its home market, Nigeria, late last year. The company said in February it would focus on cost controls, margin and profit growth in 2017 over cement sales volume, as manufacturing costs climbed 60 percent last year.

“Despite lower group volumes, we delivered significantly higher revenues and earnings before interest, taxes, depreciation and amortization after realigning prices late in 2016,” Chief Executive Officer Onne van der Weijde said in the statement.

Nigerian companies including Dangote, which is controlled by Africa’s richest man, Aliko Dangote, are battling an economic downturn in the West African nation where power cuts, arising from limited gas supplies, a shortage of dollars and a weakened naira increased costs.

Dangote Cement has started sourcing coal from Nigerian mines owned by its parent company, Dangote Industries, Van der Weijde said. “This has not only helped us to improve margins but also reduced our need for imported coal and the foreign currency needed to buy it,” he said.

Dangote Cement has annual production capacity of nearly 46 million tons from plants in Nigeria and at least nine other African countries. The company’s African operations outside Nigeria saw volumes rise 21 percent and revenue 74 percent. Pan-African operations now contribute almost 28 percent of the group’s revenue.