Dangote Cement’s performance in 2020 Q1, high

By Ambrose Nnaji

Amidst the corona virus pandemic which is currently ravaging the entire globe, the pan African cement manufacturer leader, Dangote Cement Plc has posted a strong performance in the first quarter (Q1) ended March 31 2020

Profit Before Tax (PBT) appreciated by 11 per cent, from N78.96 billion to N88.06 billion, while profit after tax (PAT) stood at N60.592 billion, compared with N60.254 billion in 2019. In spite of the blend of economic challenges, stronger competitive landscape, and geometrically rising cases of the virus across most of the company’s Pan African markets, revenue still rose to N249.182 billion, up from N240.157 billion in the corresponding period of 2019.

Nation Update gathered that the company had raised prices in Nigeria by 4.9percent which analysts believed was in a bid to fully pass on the higher value added tax (VAT) to final consumers. This is as management extended price rebates and discounting to distributors in a bid to support volume growth which stood at a total volume of 4.0Mt sold in Nigeria while Pan African sales accounted for 2.28MT.

Chief Executive Officer, Dangote Cement, Michel Puchercos, said the resiliency of the management and staff of the company led to the delivering good results despite the lockdown caused by the COVID-19 pandemic and given the blend of economic challenges, stronger competitive landscape, and geometrically rising cases of the virus across most of the company’s Pan African markets.

Purchercos noted that “From the beginning of the COVID-19 pandemic, we have proactively deployed all recommended measures to protect the health and well-being of our employees, customers, suppliers and communities. As such, we have implemented several rigorous protocols in all our operations across the continent. We are closely monitoring all markets according to the guidance provided by the authorities in each country.

We continue to provide superior services and deliver high quality products to our customers. 2020 started strongly, with growth across the board despite the early effects of the COVID-19 pandemic. We achieved a record high quarterly EBITDA margin in Pan-Africa and a record high quarter in Nigeria, with revenues of N179 billion and domestic volumes at 4.0Mt.”

He also disclosed that in April, Dangote Cement successfully raised N100 billion series 1 Bond from the Nigerian debt capital market despite the current challenging environment.

“This illustrates investors’ continuous confidence in Dangote Cement’s strategy. This landmark transaction is the largest ever bond issuance by a corporate issuer in Nigeria. It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market” he added.

The report disclosed that the management highlighted plans to raise installed capacity in Obajana this year to 16.25 metric tons (MT), especially at a time where the company still faces the hurdle of both dividend payment (NGN270 billion) and share buyback (NGN240 billion) obligations to shareholders.

The report stated that the cement consumption outlook across most of the countries in which the company operated appeared broadly weak. Given the combination of (1) unimpressive revenue profile of the Nigerian government, occasioned by the rapid pace of crude oil price downslide, and challenged private investment, as well as the COVID-19 induced economic downturn across other African markets, with South Africa and Zambia already facing significant pressure from economic recession.

Furthermore, analysts are of the opinion that the impact of the COVID-19 pandemic would reflect on the company’s Nigeria operations from Q2-20, given weaker revenue profile for the federal government of Nigeria (FGN) which would negatively impact infrastructure spending.