Dangote Cement Plc records robust revenue growth by 16% to N1034.2 billion amid challenging environment

• Company proposes a final dividend payment of N16 per share

Charles Abuede

Dangote Cement Plc, Africa’s largest cement manufacturer and a subsidiary of the Dangote Group has reported a robust set of numbers like its other rival BUA Cement Plc in the full year 2020. The company recorded a 16 per cent year on year revenue growth to N1.03 trillion in 2020 from N891.7 billion reported in 2019. The growth was broad-based and was driven by robust domestic market demand despite the challenging environment.

Dangote Cement, in its audited financial statement, posted to the Nigerian Stock Exchange on Tuesday shows that growth in group revenue was led by Nigeria (+18.0%), and supported by Pan-Africa (+12.7%). Also, the company recorded a robust 8.6 per cent group volume growth, driven by Nigeria with an 11.5 per cent cement volume growth, aided by a 4.8 per cent cement volume growth in Pan-Africa. In Nigeria, net revenue per tonne amounted to N45,179 in 2020 versus N43, 222 in 2019, a 4.5 per cent rise, due to lower discounts and rebates. On the other hand, Nigeria’s cement market remained firm and resilient, following its recovery from the lockdown and restrictions placed in 2Q20; however, the low-interest-rate environment boosted the appetite for real estate investment, leading to increased construction industry activity.

A breakdown of the financial statement revealed that Dangote Cement reported a 37.7 per cent year on year growth in profit after tax (PAT) from N200.5 billion to N276.1 billion in 2020 resulting from a limitation caused by increased tax expense due to Pan-African subsidiaries making losses that reduced the Group’s profit without direct tax benefits for those losses. However, with a 15.6 per cent rise in the share of profit from associate, company’s profit before tax (PBT) was reported at N373.3 billion, resulting from a healthy 49 per cent year on year growth. Similarly, the finance income of the company almost tripled by 291.8 per cent from N7.6 billion to N29.8 billion in 2020 and was largely due to increased interest income and FX gains. The finance cost slipped 23.7 year on year as the company had reported an FX loss in 2019.

Elsewhere, Dangote Cement recorded strong performance not only at the top line but also at the bottom line, owing to the cost-saving measures undertaken by the company. Despite inflationary pressures and foreign exchange volatility, the company’s disciplined cost control measures helped it to maintain a relatively flat cash cost per tonne. The cost control measures include improved plant efficiency, better fuel mix and general overhead optimisation. The group EBITDA margin expanded 1.9 percentage points to 46.2 per cent in FY20, primarily driven by a 5.5 per cent expansion in the Pan-Africa EBITDA margin, offset by a slight 0.7 per cent points EBITDA margin contraction in Nigeria. The administrative costs for the company were up 11.5 per cent year on year from N54.1 billion to N60.3 billion in 2020. The selling & distribution expenses declined 4.4 per cent to N153.7 billion in FY20. There was a significant rise in Other income of the company (+59.5% YoY), majorly due to higher insurance claims and sundry income, resulting in 29.0 per cent year on year growth in operating profit to N386.7 billion in FY20.

Despite the impact of COVID-19, Dangote Cement’s Nigerian operations sold 15.9 metric tonne (Mt) for the full year 2020 compared to 14.1Mt in 2019, a 12.9 per cent growth. This includes both cement and clinker sales. Sales volumes in Pan-Africa accounted for 38.8 per cent of the group volume and were up 4.4 per cent year on year to 10 Mt in 2020, despite the lockdowns and restrictions put in place in the first half of 2020. Pan-African revenues grew 12.7 per cent year on year to N318.7 billion in FY20. The region achieved a record high EBITDA of N71.3 billion (before central costs and eliminations), up 49 per cent, supported by solid performance in Ethiopia and Senegal. This represents an EBITDA margin of 22.4 per cent for full-year 2020 versus 16.9 per cent in 2019. The higher profitability was mainly attributable to volume growth and cash cost improvement in 7 of the company’s 9 Pan-African operations.

Finally, the company recorded a robust 8.6 per cent group volume growth, driven by Nigeria with an 11.5 per cent Cement volume growth, aided by a 4.8 per cent cement volume growth in Pan-Africa. Moreover, the strong volume growth was enhanced by the company’s successful national consumer promotion “Bag of Goodies – Season 2” and lower rains in the third quarter compared to the previous year.

Meanwhile, a final dividend of N16 per share, subject to the appropriate withholding tax and approval will be payable to shareholders whose names appear in the Register of Members as at the close of business on April 27, 2021.