Nigerians groan as higher cement pricing boosts manufacturers’ fortunes

• Industry records N5.15 trillion revenue, battles high cost of sales

Bamidele Famoofo

The cement industry in Nigeria has continued to survive the unfavourable economic conditions which make the manufacturing sector of the economy sweat, leaving little or no space for survivors except through a price-burden transfer to the consumers.

Analysis of the performance of the three key players in the industry namely: Dangote Cement Plc, BUA Cement Plc and Larfarge ( WAPCO) Plc during the financial year ended December 31, 2024, showed that the average Nigerian who patronized these companies incurred an average 74 per cent increase in price to purchase their products.

Increase in the price of cement clearly added to the living pressure on Nigerians who are battling to survive hardships caused by rising inflation, especially food inflation and effects of removal of petroleum products subsidies and the increasing energy cost that arose due to the removal. The weak strength of the Naira among others have caused the ordinary citizen of the most populous black nation in the world a nightmare since the government of President Bola Tinubu came onboard in May 29, 2023.

Nigeria’s headline inflation rose to 24.23 per cent in March 2025, up from 23.18 per cent recorded in February, according to the data released by the National Bureau of Statistics in March.

The figure represents a 1.05 percentage point increase, marking a sustained rise in the general price level across the country.

On a month-on-month basis, inflation rose sharply by 3.90 per cent in March, compared to 2.04 per cent in February, indicating that the average price level increased at a faster pace.

The statistics office noted that the major drivers of the year-on-year inflation rate were food and non-alcoholic beverages, which contributed 9.28 percentage points; followed by restaurants and accommodation services (2.99 per cent), transport (2.47 per cent), and housing, water, electricity, gas, and other fuels (1.95 per cent).

The increase in cost of sales in the cement industry was primarily driven by higher energy costs, and operation & maintenance service charges, reflecting inflationary pressures, elevated energy prices, and currency depreciation.

Despite rising operational costs and declining profit margin, Cement manufacturers continue to thrive, recording appreciable increases in revenue and profit. Analysis of the financial figures of key players in the industry for the FY 2024 showed that aggregate revenue rose to N5.15 trillion, Dangote Cement being the largest contributor at N3.58 trillion, accounting for about 70 per cent of industry revenue. The largest cement maker in Africa grew its revenue by increasing the price of its products by 57 per cent in Nigeria.  BUA Cement recorded a revenue growth 90.5 per cent as a result of price adjustments (c.85.7% y/y), yielding an all-time high revenue of N876.47 billion. Larfage (WAPCO) did not miss out in the price largesse as its revenue grew by about 72 per cent to N697 billion.

Aggregate profit (net) in the sector at the end of the 2024 financial year stood at N677.16 billion. Dangote Cement Plc was the largest contributor to profit at N503.25 billion representing about 74 per cent of industry aggregate. Larfarge increased profit to N100 billion with a 96 per cent growth while BUA Plc grew by 6.4 per cent y/y to N73.91 billion.

Profit margin suffered a setback due to high cost of operations in the industry with average figure standing at 13.15 per cent. The implication is that only about 13kobo of very 100kobo deployed into business by players in the period was converted to profit for shareholders.

Peer- 2- Peer

Dangote Cement Plc

Dangote Cement’s aggregate revenue rose 62.2 per cent y/y to N3.58 trillion in 2024FY (Q4-24: +47.1% y/y to N1.02 trillion) as the average price per tonne increased by 59.7 per cent to N129,224.41, while volumes inched up by 1.6 per cent y/y to 27.71Mt. On geographical performance, Nigerian operations revenue surged by 63.7 per cent y/y to N2.19 trillion (58.6% of total revenue), while Pan-Africa operations revenue grew by 60.0 per cent y/y to N1.48 trillion (41.4% of total revenue).

Revenue growth in Nigeria was driven by a c.56.6 per cent y/y upward adjustment in cement prices and a 7.9 per cent y/y increase in sales volume to 17.68Mt.

The company’s management attributed the volume growth to enhanced operational efficiency, citing the launch of the Distributor Management System (DMS), which allowed customers to independently manage sales transactions and track deliveries remotely. Additionally, the company reported a 69.1 per cent increase in cement and clinker exports at 1.20Mt, with thirty-one (31) clinker shipments delivered to Ghana and Cameroon. In the Pan-African market, revenue expansion was primarily driven by a c.61.7 per cent y/y increase in pricing, amid a 1.1 per cent y/y decline in sales volume to 11.13Mt, which was attributed to adverse weather conditions in Tanzania and election-related uncertainties in Senegal.

Meanwhile, gross margin declined by 64bps y/y to 59.3 per cent in 2024FY due to a steep 64.8 per cent y/y increase in the cost of sales (excluding depreciation). The surge in cost of sales is attributable to higher energy costs (+70.3% y/y | 46.7% of COGS) and raw material expenses (+47.5% y/y | 28.3% of COGS). The escalation in costs underscored the impact of rising diesel prices (+43.4%), and the depreciation of the naira (-40.1%), significantly inflating the cost of imported materials.  However, in Q4-24, the company saw a gross margin improvement of 12.21ppts y/y to 65.5 per cent, as cost of sales growth slowed to 8.6 per cent, while revenue surged by 47.1 per cent y/y.

At the same time, EBITDA margin declined by 209bps y/y to 38.0 per cent in 2024FY, weighed down by a 76.9 per cent increase in operating expenses (ex-depreciation). This increase was primarily driven by elevated haulage costs (+73.1% y/y | 65.3% of OPEX) during the period.

In Q4-24, EBITDA margin improved by 14.29ppts y/y to 46.4 per cent, as OPEX growth slowed to 38.3 per cent y/y, reflecting a more tempered rise in haulage expenses at 33.7 per cent.

Stock market experts at Cordros Capital Limited, attribute this improvement to the stabilisation in diesel costs, alongside the company’s strategic shift toward alternative energy sources, particularly the introduction of Compressed Natural Gas (CNG) trucks during the period.

Elsewhere, net finance costs surged significantly by 87.5 per cent y/y to N531.73 billion in 2024FY, (Q4-24: -3.9% y/y to N109.64 billion) driven primarily by higher FX losses (+52.0% y/y to N249.32 billion) and interest expenses (+210.0% y/y to N448.08 billion), which offset the growth recorded in interest income (+515.1% y/y to N168.57 billion). The rise in FX losses reflects the impact of naira depreciation (-41.0% y/y), while the sharp increase in interest expenses underscores the effect of a higher average effective interest rate on borrowed funds (+850bps y/y to 25.8%) and a 38.4 per cent y/y expansion in gross debt to N2.55 trillion with N1.82 trillion debt added during the period.

Cordros noted that the net finance cost decline in Q4-24 was due to a staggering 19.7x increase in interest income, which helped cushion the impact of elevated borrowing costs.

Consequently, profit before tax increased by 32.4 per cent y/y to N732.54 billion in 2024FY (Q4-24: +52.9 per cent y/y to N326.15 billion), while profit after tax increased by 10.5 per cent y/y to N503.25 billion (Q4-24: +25.9% y/y to N225.15 billion).

Analyst’s comments: “DANGCEM delivered strong revenue growth across both its Nigerian and Pan-African operations, leveraging premium pricing and modest volume growth. However, rising inflation, elevated interest rates, and currency pressures weighed on margins. That said, Q4-24 saw a notable improvement in profitability, driven by cost efficiencies and stabilising macroeconomic conditions. In 2025, we expect volume growth to be the key revenue driver, with limited scope for significant price hikes. Additionally, EBITDA margin and EPS are projected to improve, supported by a more stable naira, and continued cost savings from the company’s alternative fuel strategy and the phased deployment of CNG trucks in its distribution network.”

BUA Cement Plc

BUACEMENT’s revenue grew by 90.5 per cent y/y to N876.47 billion in 2024FY (Q4-24: +136.1% y/y to N293.06 billion), driven by upward price adjustments (c.85.7% y/y) and higher sales volumes – aided by the commissioning of new production lines at the Obu and Sokoto plants. Despite the robust revenue growth, gross margin declined by 707bps y/y to 37.1 per cent, as the cost of sales (ex-depreciation) surged by 114.7 per cent y/y, outpacing revenue growth.

The cost increase was primarily driven by higher energy costs (+129.2% y/y | 51.3% of COGS), and operation & maintenance service charges (+146.3% y/y | 39.1% of COGS), reflecting inflationary pressures, elevated energy prices, and a currency depreciation (-40.1%). However, in Q4-24, gross margin improved significantly by 1,151bps y/y to 43.3 per cent (+745bps q/q), as revenue growth (+136.1%) outpaced cost increases (+96.2% y/y).

Meanwhile, EBITDA margin contracted by 596bps y/y to 31.0 per cent in 2024FY (Q4-24: +1,232bps to 37.5%), further pressured by a 54.8 per cent y/y increase in operating expenses (ex-depreciation), largely driven by the surge in distribution costs (+47.6% y/y | 56.1% of OPEX).

Net finance costs rose 73.9 per cent y/y to N133.96 billion in 2024FY (Q4-24: +37.3% y/y to N59.15 billion), due to higher net FX losses (+31.7% y/y to N92.11 billion) and a 201.2 per cent y/y rise in interest expenses to N60.04 billion. Meanwhile, interest income grew 41.2 per cent y/y to N18.19 billion.

As a result, profit before tax (PBT) increased by 48.2 per cent y/y to N99.63 billion (Q4-24: N37.88 billion vs. loss before tax of N18.52 billion in Q4-23), despite a higher tax expense of N25.72 billion (vs tax credit of N2.23 billion in 2023FY) and profit after tax (PAT) rose by 6.4 per cent y/y to N73.91 billion (Q4-24: N24.94 billion vs loss after tax of N6.61 billion in Q4-23).

Analyst’s comments: “As anticipated, BUA Cement delivered strong revenue growth in 2024, driven by upward price adjustments and higher sales volumes. However, persistent cost pressures and currency depreciation constrained margins. Nonetheless, a standout Q4-24 performance fueled a 6.4% y/y increase in earnings, reversing 9M-24 earnings slump (-35.8% y/y). For 2025, we anticipate sustained revenue growth, and EBITDA margin expansion driven by increased demand and higher contributions from new plants.”

Lafarge Plc

Lafarge Plc achieved record sales of 697billion with profit after tax up by 96 per cent to close at N100billion at the end of the 2024 financial year.

Lolu Alade-Akinyemi, CEO of Lafarge Africa, commented, “I am excited to report our record-breaking revenue of 697bN and PAT of 100bN for the full year 2024, a testament to our strong market positioning, operational efficiency, cost management and dedication to value creation. Despite a challenging business environment, we have remained resilient, leveraging innovation and green growth in line with our sustainability ambitions, while also delivering value to our stakeholders. Lafarge Africa Plc remains committed to strengthening its leadership position in offering environmentally friendly building solutions while driving long-term profitability. I would like to thank our esteemed customers, employees and all other stakeholders of Lafarge Africa for their commitment despite the macroeconomic headwinds being experienced in the industry.”

Lafarge Africa unveiled Watershield Cement in Q1 2024; the product continues to make good strides in the market. This product has started to redefine industry standards, offering a solution previously unseen in construction materials.

“Lafarge Watershield Cement prevents water from permeating into buildings, thus ensuring the durability of the structure. This can be used for new structures and for remedial works where rust marks or seepage is evident on the building. Lafarge Africa launched a new product in Q4 2024, named Supa Whyte Plaster of Paris (POP) product which further extends our range of products in the industry. The product is set to improve versatility in design, allowing a wide range of decorative solutions,” the CEO noted.

Also, Lafarge Africa launched its first ECOPlanet cement in Q3 2024 to strengthen its commitment to a greener planet. Speaking about the innovation, Alade-Akinyemi said, “Our new ECOPlanet product is expected to significantly reduce our carbon footprint in the industry. Lafarge Africa introduced Calcined Clay in Q4 2024, a low-carbon raw material, into its cement manufacturing process, which in turn further reduced our CO2 emission and carbon footprint.”

Industry Outlook

The Nigerian Infrastructure and Construction Sector is expected to continue to grow despite inflationary pressure on purchasing power. It is expected that the sector will continue to maximize volume opportunities across its markets and actively manage costs.