FSDH Initial Reaction: Dangote Cement FY22 results 
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February 28, 2023/FSDH Research

Key Performance Highlights:

• Dangote Cement Group revenue increased by 17.0% YoY to N1,618.3 billion in FY22 (2021: N1,384.6 billion) and 22.0% YoY in 4Q22 to N441.1 billion. The revenue growth was led by Nigeria (+21.3%) and supported by single-digit revenue growth in Pan-Africa (+4.4%). The sales growth was driven primarily due to price increases to offset heightened inflation. The total sales volume stood at 27,767 kilotonnes in FY22, a 5.1% decrease from 29,271 kilotonnes in FY21. Out of total sales volume, the volume of the Nigerian operation declined 4.1% YoY to 17,841 kilotonnes in FY22. The slightly lower volume in FY22 compared to the elevated high base of FY21 was due to significant inflation, rising interest rates and energy supply disruptions which impacted production. Pan-African volumes also reduced by 8.1% YoY to 9,982 kilotonnes in FY22 due to increased supply chain challenges and maintenance activities. Furthermore, the company recorded a 3.4% YoY fall in Nigeria Cement Volume, and Pan Africa recorded a 9.4% YoY drop in Cement volume in FY22.
   
• The gross profit increased 14.8% YoY to N955.4 billion in FY22, resulting from a relatively higher rise in the cost of sales due to increased material costs and a rise in fuel & power consumed (FY22: N266.5 billion, up 35.5% YoY) due to increasing energy costs, especially AGO and coal. The group EBITDA margin contracted 571 bps YoY to 43.8% in FY22. The total selling and administration expenses rose by 46.5% to ₦375.1 in FY22, driven by an increase in haulage expenses due to the significant rise in AGO costs. Inflationary pressure and the devaluation of foreign currencies also affected the part of this increase. The administrative costs for the company grew 24.1% YoY to N79.9 billion in FY22. The Selling and Distribution expenses soared 54.0% YoY to N295.2 billion in FY22. Moreover, the company’s other income declined 14.3% YoY to N5.3 billion in FY22 from N6.2 billion in FY21 due to a decrease in miscellaneous income, resulting in a mere 0.6% YoY increase in operating profit to N585.9 billion in FY22. The company’s operating margin declined 590 bps YoY to 36.2% in FY22.
   
• The company’s finance income jumped 86.4% YoY to N38.7 billion in FY22, offset by a 98.4% YoY rise in finance cost to N130.4 billion in FY22, primarily due to an N53.9 billion foreign exchange loss in FY22. Consequently, profit before tax was reported at N524.0 billion, a 2.7% YoY decrease. Due to a decrease in the effective tax rate to 27.0% in FY22 compared to 32.3% in FY21, the profit after tax came in at N382.3 billion in FY22 against N364.4 billion in FY21. The group earnings per share jumped 4.9% YoY to N22.27 in FY22 (FY21: N21.24) per share. Dangote cement announced a final dividend of N20.00 per share subject to the appropriate withholding tax and approval to be paid to shareholders whose names appear in the Register of Members at the close of business on March 30, 2022.
   
• On 18 January 2023, Dangote Cement announced the retirement of Mr. Michel Puchercos from the Board of Directors and as the Group Managing Director/CEO of Dangote Cement Plc, effective 28 February 2023. Furthermore, the Board approved the appointment of Mr. Arvind Pathak as Group Managing Director of Dangote Cement Plc, effective 1 March 2023. Mr. Pathak is an experienced business leader who worked as MD and CEO of Birla Corporation Ltd before this appointment. He was the Chief Operating Officer and Deputy Group Managing Director of Dangote Cement Plc until 2021.
   
• During the Extraordinary General Meeting held on 13 December 2022, Dangote Cement’s shareholders authorized the company to undertake a share buyback of up to 10% of its issued outstanding shares. The buyback programme is currently undergoing regulatory approvals.

Market Reaction: Investor’s reaction to the FY22 results was subdued as the stock remained unchanged at N272.00 versus a 0.69% gain in the All-Share Index (27/2).

Dangote Cement Earnings Highlight FY22

Source: Company Financials, FSDH