By InvestAdvocate

Lagos (INVESTADVOCATE)-Cement producer, Dangote Cement Plc (DANGCEM) said on Thursday its 2014 audited period profit dropped 21 percent to N159.50 billion from N201.20 billion reported a year earlier, according to a filing with the Nigerian Stock Exchange (NSE).

Also, profit before tax (PBT) declined 3.18 percent to N184.69 billion from N190.76 billion recorded in 2013 end.

Revenue of the cement maker increased marginally 1.4 percent to N391.64 billion from N386.18 billion declared last year.

Investment One Research in its analysis said the company’s weakened result is broadly reflective of the unfavourable macro-environment coupled with the significant rise in finance cost as a result of the naira devaluation (as the company’s finance expenses are partly dollar denominated).

The report affirmed that among other factors, gas supply disruptions may have contributed to the depressed sales volumes during the quarter and consequently stifled earnings. “Although we are yet to get management’s perspective on the results, we feel that the elevated interest rate environment as well as the aforementioned challenges contributed to the unimpressive result during the quarter,” the report added.

The report further affirmed that despite the aforementioned, DANGCEM continues to drive its investment plans in terms of capacity expansions to meet increasing demand in Africa (though we foresee a slowdown in capex in the immediate).

Dangote Cement recently added 6mmtpa from its newly built lines C and D at its Ibese plant to the cement market. This implies that the supplies to the Nigerian cement market will be 12mmtpa of cement from Dangote’s Ibese cement factory only. With this, it now has an installed combined capacity (from all its cement plants) of about 29 million tonnes pa.

“Overall, we continue to believe the growth potential for the sector remains strong, considering the low per-capita consumption level. However, our near term view remains constricted by the current macro challenges in the country,” Investment One report said.

The cement producer announced a dividend of N6.00 per share to investors of the company compared to N7.00 a year earlier; indicating a cut in dividend of 14.3 percent. The N6.00 proposed dividend payout, implies a dividend yield of 3.93% percent (based on last session’s closing price).

At the close of business on Thursday, share price of the company declined 0.82 percent to N151.35 from N152.60 losing N1.25.