Dangote Cement Plc – Higher Volume, Improved Pricing and Exchange Rate Benefit Impact Earnings
May 2, 2018
Dangote Cement Plc reported another impressive performance in the first quarter result of 2018 as revenue increased by 16.31% to ₦242.12 billion (vs. ₦208.174 billion in Q1’17).
The increase in the revenue was boosted by higher volume and improved pricing in Nigeria and increased pertonne revenue in Pan-African operations (i.e. other African nations except Nigeria). From the company’s cement capacity of 45.55 million tonnes per annum, a total of 6.20 million tonnes was produced in Q1’18 (vs. 6.03 million in Q1’17). Production cost of sales increased by 10.88% to ₦97.35 billion in Q1’18 (vs. ₦87.80 billion recorded in Q1’17).
In general, the increase in the production cost of sales was driven by increased volumes in Nigeria and higher costs in Pan African operations, due to the exchange rate for Naira which was about ₦337/US$1 at the end of Q1’18 compared to ₦305/US$1 in Q1’17.
However, we are enthralled with the company’s ability to reduce the cost margins to 40.21% in Q1’18 from 42.18% recorded in Q1’17.
As a result, gross profit grew by 20.27% to ₦144.76 billion in Q1’18 (vs. ₦120.36 billion in Q1’17)