Dangote Cement’s Q2 profit falls 35% on diesel cost

Dangote Cement simulated ₦618.69 ▲0.74% Plc has reported a profit after tax of N66.25 billion for the second quarter of the 2022 financial year, down 34.99 percent compared to the same period last year.

Africa’s biggest cement producer said the significant increase in energy and diesel costs impacted its production.

Its revenue rose to N394.86 billion from N357.89 billion in Q2 2021, according to its unaudited accounts released on Monday.

But its revenue growth was overshadowed by the increase in production cost of sales, finance costs and other expenses.

“The rapidly increasing prices of AGO [diesel] resulted in a 54.5 percent
year-on-year increase in our selling and distribution cost,” the company said.

Dangote Cement said its group sales volumes were down 7 percent in the first half of the year to 14.2 million tonnes while sales in Nigeria dropped 5.3 percent to 9.3Mt.

It said the lower volume in Nigeria, elevated by the high base of H1 2021, was due to significant inflation, rising interest rate and energy supply disruptions, which impacted production.

The company said the energy disruptions were largely due to low gas generation in the country, leading to a severe power outage impacting various sectors of the economy.

“Despite the elevated inflation due to a very volatile global environment, the first half of 2022 has been positive. We recorded increases in revenue and EBITDA that drove strong cash generation across the Group,” the Chief Executive Officer, Michel Puchercos, said.

He said the company recorded revenue of N808.0 billion in H1 2022, up 17.0 percent compared to last year, and group EBITDA of N373.2 billion, up 6.3 percent with an EBITDA margin of 46.2 percent.

He said, “Although significant increase in energy and AGO costs are impacting production, we are strengthening our efforts to ramp up the usage of alternative fuels.

“Our Alternative Fuel Project aims to leverage waste management solutions, reduce CO2 emissions, and source material locally. So far this year, we co-processed 67,230 tonnes of waste, representing a 25 percent increase over H1 2021.”

Dangote Cement is ramping up production at our Okpella plant and is progressing well to deploy grinding plants in Ghana and Cote d’Ivoire, according to Puchercos.