The management of Dangote Cement Plc acknowledged that its half-year numbers could have been better (READ MORE), even as it assures of improvements in the remaining half of the year to deliver improved returns on investment to shareholders.
Addressing a conference call to explain the financials it submitted, the management based its assurance on ongoing work on its “cement export terminals in Lagos and Port Harcourt” to boost exports,” expressing hope that it will drive the much-needed sales revenue.
According to highlights of the call by analysts at Arthur Steven Asset Management Limited, Dangote Cement said President Muhammadu Buhari’s cabinet already approved by the Nigerian Senate would soon settle down to government business of executing capital projects as earmarked in the 2019 budget.
“We believe that government will focus on development as this is the second and last tenure of the current administration and we expect them to leave a mark and should do a lot of infrastructural development, which will, in turn, affect company sales.
“Some measures have been put in place to tackle issues being faced and they are already bringing positive results. We are confident that things will go well as currently July is going well and heading for a record high July,” the company added. More spending, the management continued, has become necessary, given that “Nigeria’s capital consumption remains the lowest in the region.”
“Cabinet has been nominated for Nigeria and we believe that government will focus on development as this is the second and last tenure of the current administration and we expect them to leave a mark and should do a lot of infrastructural development, which will, in turn, affect company sales. Some measures have been put in place to tackle issues being faced and they are already bringing positive results. We are confident that things will go well as currently July is going well and heading for a record high July,” the company added.
The company blamed the drop in sales revenue on the election delays in Nigeria, in addition to the continued discounting in response to a low growth market, heavy rains in the country, lower volumes, and higher input, as well as transport costs.
They also noted the pressures on sales mounted by new entries into the market and the hike in diesel price which increased transportation and haulage cost.
In the Pan-Africa business, the company noted the 2.7% rise in sales volume to nearly 4.7metric tones; with a breakdown showing that Tanzania volumes soared 172%; and Sierra Leone by 89%; while Ethiopia’s was steady despite electricity shortage at 50% of normal supply.
In the case of South Africa, Dangote Cement said the market remains depressed owing to lack of investments as a change of leadership and political uncertainties weighed on the economy.
To offset the impact of carbon tax introduced in June, the company said price increase was introduced in last month in that country; at a time volumes inched 13% in Zambia, owing to improved distribution through use of additional 3rd party truck and also market drivers such as lower rainfalls, improved harvest, and infrastructure projects.