About N156 billion was generated in the first quarter (Q1) of 2022 by three NGX-listed cement producers: Dangote Cement Plc, BUA Cement Plc, and Lafarge Cement Plc, an increase of 29% from N121.2 billion reported in the first quarter of 2021.
A rise in revenue helped Nigeria’s top cement makers grow their profits even though their costs of sales and operating expenses rose.
According to a report, retail cement prices in Nigeria are expected to rise from N2400-N2600 per 50kg bag in 2020 to an average of N4,000 by the end of March 31, 2022.
Nigeria’s largest cement producer and the second-largest company on the NGX, Dangote Cement, reported an 18 percent increase in profit to N105.85 billion in Q1 2022 from N89.7 billion in Q1 2021.
In the first quarter of 2022, the cement giant made N413.18 billion in revenue, an increase of 24.2 percent from the N332.65 billion it made in the same period of the previous year.
Sales volumes for Dangote Cement were hampered in the first quarter of 2022 due to domestic gas supply disruptions and high freight rates, which restricted exports to Cameroon, Ghana, and Sierra Leone. Compared to Q1 2021, when it sold 7.52 million metric tons of cement, sales volume fell by 3.6% to 7.25 million metric tons in Q1 2022.
“Our group volumes were down 3.6 percent mainly due to energy supply challenges in Nigeria,” Dangote Cement CEO Michael Pucheros said in a statement.
Cement and clinker imports from countries such as Ghana, Sierra Leone, and Cameroon affected our supply chain operations.”
In addition, a cement plant in Congo was shut down for over two months for maintenance and repairs, and a power plant in Senegal was shut down for an extended period for maintenance.
While BUA Cement’s revenue in Q1 2022 was N96.99 billion, its profit grew by 22.4% to N33.14 billion, up from N22.4 billion in Q1 2021, as the company’s revenue closed Q1 2022 at N96.99 billion.
The second-largest cement producer, Dangote, has maintained its position with a plant capacity of 35.2 million metric tons, but BUA has surpassed Lafarge to take over the top spot with a plant capacity of 11 million metric tons, while Lafarge remains at 10.5 million metric tons.
FBNQuest estimates that BUA’s plant capacity will rise to 20 million metric tons by 2024 when it commissions an additional nine million metric tons of line three plants in Kalambiana.
For the first quarter of 2022, Lafarge Africa’s profit grew by 92.18 percent to N17.6 billion, up from N9.14 billion in the first quarter of 2021, while revenue grew by 27 percent to N90.61 billion, up from N71.47 billion reported in the first quarter of 2021.
“The strong growth across the listed cement manufacturing companies as a result of price increment in the product,” said Mr. Rotimi Fakeyejo, a capital market analyst and stockbroker. Cement producers were forced to raise prices to protect their profit margins from the impact of currency devaluation.
It’s also an election year,” he said. “For 2022, we’re more likely to see increased sensitivity from the private sector. You’ll see less activity in the real estate market during election years because investors are more cautious due to global economic uncertainties.
There will be no significant impact on public sector demand, either, because policymakers will be distracted by election preparations, which will prevent them from implementing the capital expenditures included in the budget for 2022.
According to a report by FBNQuest analysts, pre-election capital expenditures will help cement makers remain stable in 2022.
Cement demand is expected to rise as a result of the completion of road and other infrastructure projects by subnational governments, according to the report.
- Tags: BUA, Cement production profit, Dangote cement, Lafarge
