Dangote Cement Plc: PAT Of N191.6 Billion

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Dangote Cement Plc built an after-tax profit of N191.6 billion at the end of its half-year trading in June 2021. This represents a year-on-year increase of 52 per cent, stepping up from a 48 per cent improvement at the end of the first quarter.

Accelerated growth in both sales revenue and profit in the second quarter provided the spur for the gain in earnings growth momentum at half a year. Turnover picked up further from a 33 per cent increase in the first quarter to 57 per cent in the second quarter.

The new strength gained in the second quarter pushed the year to date sales revenue figure to N690.5 billion, representing an accelerated growth of 45 per cent at the end of June. The cement producing company is seeing the highest sales revenue growth this year than it has recorded in many years.

The company’s mounting sales numbers continue to reflect gains head and tail in sales volume and price over the preceding year’s records. Cement production and bagging capacity were maintained at 48.55 million tonnes for the first six months of the year, up by three million tonnes year-on-year.

Cement production volume expanded in the second quarter from 6.72 million tonnes to almost N8 million tonnes in the second quarter. This sums up to a production volume of over N14.5 million tonnes at a half year compared to N11.7 million tonnes in the same period in 2020.

Sales volume also expanded from 7.52 million tonnes in the first quarter-million to 7.76 million tonnes in the second quarter. The half-year figure of N15.28 million tonnes represents a year-on-year growth of 3.2 million tonnes in sales volume.

A significant increase in the price of cement compared to last year reinforced the gains in sales volume to drive the company’s sales revenue this year.

The company’s management sustained significant cost savings, which reinforced the gain in sales revenue over the period. The company retained cost savings from input expenses to operating costs, which improved profit margins.

Cost savings are big enough to lift profit a clear 52 per cent year-on-year, improving from 48 per cent growth recorded at the end of the first quarter. Accelerated growth in sales with improved profit margin remains the profit lifting formula for Dangote Cement in the current financial year.

Sales revenue amounted to N690.5 billion for the cement company at the end of June 2021, which is a new record growth of 45 per cent year-on-year. This represents an increase of about N214 billion in sales revenue during the review period.

Input cost grew well below the increase in sales at 36.4 per cent to N276 billion and claimed a reduced proportion of sales revenue at 40 per cent compared to almost 42.4 per cent in the same period in the preceding year.

The moderated input cost freed good revenues into gross profit – which rose well ahead of sales revenue at 51 per cent to well over N414 billion at the half-year. This has created a top record gross profit margin for the company at 60 per cent.

Further cost savings were realised from administrative expenses, which slowed down from an increase of 23 per cent in the first quarter to less than 18 per cent at half a year to close at below N31 billion. The same is true of selling and distribution expenses, which grew by less than 13 per cent to over N87 billion.

The company extended its low-cost advantage in the second quarter – using a declining average cost to generate an increased naira of sales revenue. This led to a further gain in net profit margin from 26.4 per cent in the same period last year to 27.7 per cent at the end of half-year operations.

Cost savings combined with the strong growth in sales to boost operating profit – which continued speeding up from 29 per cent growth in 2020 to 65 per cent in the first quarter and further to over 72 per cent to stand at N302 billion at the half-year. This means an increase of N129 billion in operating profit during the period.

There was also a slowdown in finance expenses from an upsurge of 181 per cent in the first quarter to a 45.6 per cent increase at half a year to N30 billion. This reflects a decline in finance expenses in the second quarter.

The company’s balance sheet debts increased in the second quarter from N416 billion at the end of the first quarter and N494 billion at the end of last year to N560 billion at the half-year.

With a strong profit growth of 52 per cent to N191.6 billion at half a year, Dangote Cement is in the process of rebuilding profit from a drop of nearly one-half in 2019. The company’s closing after-tax profit of N276 billion last year still measured well below its peak profit of N390 billion in 2018.

The company earned N11.21 per share at the end of half-year, rising from N7.45 per share in the same period last year.
– Parrot Nigeria

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