The board of Dangote Cement Plc, on Thursday presented its operational result for the nine-month ended September 30, 2017 revealing that profit after tax grew at a faster pace than revenue from sales for the period, when compared to that of prior year.
According to the result, sales revenue increased by N161.483bn or 36.52% from N442.092bn in the corresponding period of 2016 to N603.575bn, with revenue from sale of cement, its core business contributing N603.377bn of the income, up from N441.977bn; while production cost of sales increased to N259.854bn from N241.684bn, driven by N87.603bn in material consumed, up from N64.248bn; and N85.979bn in cost of fuel & power consumed, as against the previous N86.984bn. This resulted in gross profit of N343.721bn, as against the N210.408bn recording in the first nine months of 2016.
During the nine-month period, while revenue and net profit from Nigeria stood at N416.113bn and N251.091bn respectively; N191.853bn came from Dangote Cement’s pan-African operating units, which sustained a N14.645bn net loss; which was further hampered the group’s N8.487bn represented the group’s central administrative cost. In 2016 nine-month, N307.762bn was earned from sale of cement and its by-product in Nigeria, just as N302.459bn in net profit, while the pan-African operations contributed N136.622bn revenue and a loss of n13.706bn; besides the N8.285bn in group administrative cost.
Administrative expenses climbed to N32.673bn from N29.973bn; just as selling and distribution expenses rose from N62.032bn to N80.824bn, with haulage expenses contributing N54.468bn, from just N14.9bn; while depreciation rose to N14.595bn from N15.699bn in the 2016 nine-month.
Other income slowed down to N2.615bn from N10.542bn; resulting in profit from operating activities of N233.139bn, compared with the N122.366bn in 2016; finance income dropped also to N26.96bn from N55.703bn, as foreign exchange gains (arising from the translation of foreign currencies denominated balances at the end of the period across the group) fell to n20.868bn from N54.365bn, while interest income improved to N6.092bn from N1.338bn. Finance costs rose from N29.353bn to N39.917bn, the bulk of which was the N39.418bn interest expense, up from N29.284bn.
Profit before tax therefore stood at n220.182bn from N148.716bn; just as income tax expense rose to n27.046bn from N16.195bn; and profit after tax from N133.521bn to N193.136bn, representing a N59.617bn or 44.64% growth for the period. The net profit resulted in Earnings Per Share of N11.30, up from N8.13 each.
Commenting on the score-card, analysts at FBN Capital Ltd, noted that “despite the stellar sales growth, what is clear is that the unit volumes in Nigeria continue to be under pressure, due to the effect of weak private demand and elevated prices.
“Similar to Q2, we believe that the marked expansion in gross margin in Nigeria was driven by the combination of higher pricing and a favourable fuel mix in favour of coal and gas as compared with low-pour fuel oil (LPFO),” the report noted.