BY: CHARLES ABUEDE
Dangote Cement group sales revenues took a 34 percent jump to hit N1.38 trillion in full year 2021 from N1.03 trillion reported in 2020, while the manufacturing subsidiary’s revenue grew 38 percent to N994 billion from N720 billion.
The growth was driven by the benefits the company derived from both strong volume and price increases, according to its audited and consolidated full year financial statement released to the investors through the Nigerian Exchange (NGX).
The cement manufacturer, Nigeria’s and Africa’s largest, by the numbers posted remains on song despite the price wars being fought among Nigeria’s cement manufacturers and the heightened competition resulting from rising demand for construction projects and housing demands in Nigeria.
The company has continued its positive ride in profitability as the economy opens up significantly despite the economic headwinds of 2020. As a result its shares have gained over six percent year to date compared with the NGX all-share index’s 11 percent, outperforming analysts’ estimates and comprehensively outperforming its closest rival, Lafarge Africa, with 27.1 percent year on year in revenue.
The group’s full year result shows there was a 32 percent rise to N364.4 billion in profit after tax (PAT) for the reported period from N276.06 billion in the previous year, thanks to the marginal increase in income tax expense in the year. In the same vein, there was a 44.2 percent year on year increase in the earnings before tax to N538.4 billion as a result of pioneer tax exemptions enjoyed by the company for the Ibese lines and Obajana Line 4 closed in 2020.
For the fourth quarter of 2021, Dangote Cement reported a mixed result as sales grew 33 percent year on year to N361.5 billion while the profit before tax improved by around 31 percent to N132.9 billion.
Also from the report, net income came flattish because of a higher effective tax rate of 35.1 percent, which compares with 33.5 percent in Q4 of 2020. The year on year sales growth benefited from both strong volume growth and price increases, while earnings before interest, tax, depreciation and amortisation (EBITDA) during the quarter rose 43 percent to N151 billion for Nigeria, while the for pan-Africa, sales growth of 16 percent year on year to N99.5 billion was driven by strong Senegal, Ethiopia and Zambia performances.
Noteworthy from the report is that the company has managed to improve its margins every quarter on a year on year basis. The total sales volume stood at 29,271 kilo tonnes in FY21, a 13.8 percent increase from the levels of 25,721 kilo tonnes in FY20. The sales volume also increased 2.5 percent quarter on quarter to 7,108 kilo tonnes in the fourth quarter of 2021.
In other areas, total selling and distribution expenses rose 24.7 percent year on year in FY21, mainly due to an increase in haulage expenses to N147 billion in FY21 from N98.9 billion in the previous year. The administrative costs for the company were up 6.6 percent from N60.4 billion to N64.4 billion in FY21.
There was a rise in the company’s other income by 30.9 percent year on year, majorly due to income derived from the sale of electricity at N5 billion (2020: N3.29 billion) and sale and disposal of PPE for N0.5 billion, which offset the drop in the insurance claims to N0.50 billion from N1.3 billion. Also, the company’s net finance cost increased 49.4 percent year on year to N65.7 billion in 2021, primarily due to foreign exchange loss of N8.7 billion in FY21 and an increase in the average effective interest rate to 10.75 percent from the 2020 levels of 9.67 percent per annum.
Meanwhile, Dangote Cement said it would be paying a final dividend of N20 per share to shareholders whose names appear in the register of members at the close of business on May 30, 2022.