FSDH Initial Reaction: Dangote Cement FY23 results 
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March 4, 2024/FSDH Research

Key Performance Highlights:

• Dangote Cement Group revenue increased by 36.4% YoY to N2,208.1 billion in FY23 (FY22: N1,618.3 billion) and 57.2% YoY in 4Q23 to N693.5 billion. The FY23 revenue growth was led by Pan-Africa (+123.2%) and supported by single-digit revenue growth in Nigeria (+7.7%). The sales growth was driven primarily due to price increases to offset heightened inflation. However, the Company’s solid revenue growth was adversely impacted by the higher cost of sales and a significant increase in finance costs. The total sales volume stood at 27,280 kilotonnes in FY23, a 1.8% decrease from 27,767 kilotonnes in FY22.
   
• The gross profit rose 25.8% YoY to N1,201.8 billion in FY23 (FY22: N955.4 billion). The group’s EBITDA margin declined 358 bps YoY to 40.2% in FY23. The selling and distribution expenses were up 23.7% YoY to N365.1 billion in FY23, primarily due to increased haulage expenses. The administrative expenses for the Company grew 58.4% YoY to N126.5 billion in FY23, mainly due to a hike in Salaries and related staff costs to N36.5 billion, along with a surge in General administrative expenses to N14.0 billion in FY23. The Company’s other income surged 367.9% to N25.0 billion in FY23 from N5.3 billion in FY22, primarily due to Other miscellaneous income, including N7.0 billion generated from selling materials to related parties. Consequently, the Company witnessed a 25.3% YoY increase in operating profit to N734.2 billion in FY23. However, The Company’s operating margin deteriorated by 295 bps YoY to 33.3% in FY23.
   
• Dangote Cement’s finance income was down 29.2% YoY to N27.4 billion, while finance costs were 138.5% higher YoY to N311.0 billion in FY23, mainly due to foreign exchange loss of N164.1 billion. The Company also reported a 248.6% YoY gain in monetary positions to N101.2 billion in FY23 (FY22: N29.0 billion). Consequently, profit before tax was reported at N553.1 billion, a 5.6% YoY rise. Due to a lower effective tax rate of 17.6% in FY23 compared to 27.0% in FY22, the profit after tax increased 19.2% YoY to N455.6 billion in FY23 against N382.3 billion in FY22. The group earnings per share were N26.47 in FY23 versus N22.27 in FY22.
   
• Looking at quarterly performance, the revenue in 4Q23 was up 57.2% YoY to N693.5 billion, while the cost of sales increased 103.0% YoY to N363.5 billion in FY23. The selling and distribution expenses increased 36.5% YoY to N112.5 billion, while the finance costs increased significantly to N219.9 billion in FY23 from N3.8 billion in FY22. The Company reported an exchange gain on FX-denominated transactions of N99.0 billion in 4Q23; its net profit was up by 5.2% YoY compared to the prior quarter. However, the Company’s net margin declined by 1,269 bps YoY, while the EBITDA margin contracted by 1,129 bps YoY.
   
• On 29 February 2024, Dangote Cement proposed a final dividend of N30.00 per share (FY22: N20.00 per share), subject to appropriate withholding tax and shareholder approval. The final dividend will become payable on 29 April 2024 to all shareholders registered in the Company’s books at the close of business on Monday, 15 April 2024.

Market Reaction: Investor’s reaction to the FY23 results was muted as the stock remained unchanged at N686.70 versus a 1.23% loss for the All-Share Index (1/3).

Dangote Cement Earnings Highlight FY23

Source: Company Financials, FSDH