Dangote Cement Plc’s aggressive expansion plan, orchestrated with a view to consolidating its position in the market has yielded fruit as the company recorded third quarter earnings spurt that beat analysts’ expectations.
The results means the board of directors and management of the company are adding value to shareholders wealth while pursuing its organic and inorganic growth objectives.
For the first nine months through September 2015, Nigeria’s largest listed company’s net income increased by 12.46 percent to N158 billion, from N140.47 billion last year.
Sales gained 17.80 percent to N365.45 billion.
Analysts attribute the stellar performance to its operations in other African countries such as Senegal, Cameroon, and Ethiopia.
Dangote expects to start production at a plant in Tanzania this year followed by one in Republic of Congo in 2016, according to a slide presentation posted on the firm’s website.
A new plant in Kenya may start up late in 2017, the company said on its website.
The company is still targeting sales volumes of 18 million to 19 million tons this year, despite economic doldrums.
Despite its growth in the period under review, Dangote has been grappling this year with fuel shortages as cost of sales increased by 25.51 percent to N138.70 billion in Sept. 2015 as against N110.50 billion last year.
Cost of sales ratio however reduced to 37.95 percent in the period under review from 35.62 percent last year which means the company is spending less to produce each unit of products.
Gross profits were up by 13.54 percent to N266.75 billion in Sept 2015 as against N199.72 billion. Gross profit margins increased to 62.04 percent in 2015 from 64.37 percent last year.
Analysts say for Nigeria’s cement production to measure up to other countries in Asia and Sub Sahara Africa, it will have to spend copiously on infrastructure.
For instance, the 17 million housing deficits and rapid urbanization in Africa’s largest economy will undoubtedly drive the demand for building materials.
According to the United Nations, Nigeria’s urbanization rate was estimated at 51 percent in 2012, which suggests that over 80 million people live in the cities; the UN estimates that this number is growing at an annual rate of 3.5 percent.
The cement maker’s total assets remained flattish at N1.10 trillion while shareholder’s fund stood at N591.88 billion. Earnings per share EPS increased by 18.64 percent to 980k in 2015 from 826k the previous year.
Dangote’s Obajana plant in Kogi state, Nigeria, is the largest in Africa with 13.25 million tonnes capacity across four lines.
The Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12 million tonnes. The Gboko plant in Benue state has 4 million tonnes capacity.
OUR REPORTER
