As Dangote Cement celebrates its best ever financial year after declaring record revenue and profit after tax (PAT) for full year 2018 at about N901.2 billion and N390.3 billion respectively, shareholders of the company have the most to celebrate as they are set to receive a windfall profit through record dividends estimated around N272 billion. The total amount of dividends to be paid out by the company after approval by shareholders will exceed the total profit after tax earned in full year 2017 which was around N204.2 billion.
“It is almost as if investors have literally struck a mine in Dangote Cement. For a N900 billion company to keep growing at the pace it has is nothing short of spectacular!” said Maju Eldad, lecturer in Economics Department at Federal University of Kashere, Gombe.
Dangote delivered earnings growth of around 91 percent as PAT climbed to N390.3 billion from N204.2 billion. However, most of the growth in profit is thanks to a tax credit from the government. Dangote was finally awarded pioneer status, enabling the company collect up to N89.5 billion in tax credit for the year 2018. However, analysts expect the tax credit to a one-off and the company will resume paying taxes this year.
A stellar financial performance helped the company grow its shareholder’s equity from N781 billion to N986 billion, as the company nears a record networth of N1 trillion.
“We expect that book value (shareholder’s equity) will now cross N1 trillion at some point this year, either in Q1 or Q2 but its more likely to do so in Q1. The company is expected to generate more than N55 billion in PAT during the first three months of 2019 which should get it over N1 trillion in equity capitalization.”
Dangote Cement has solidified its position as the most capitalized company in Nigeria after posting almost N1 trillion in Shareholder’s equity. Dangote Cement with N986 billion is shareholder’s value is more than N100 billion ahead of the second most capitalized company, Zenith Bank who reported N815 billion in total equity.
Analysts are forecasting that the stock will rally significantly after the price to earnings ratio dropped from 20 to 8.3 after profit almost doubled from last year. At its peak, Dangote Cement traded at N290 per share in February 2018. The stock closed at N195 as at Thursday last week.
IFEANYI JOHN
