April 26, 2024/CSL Research

Dangote Cement’s unaudited Q1 2024 results showed a 101% y/y growth in Revenue, reaching N817.35 billion compared to N406.72 billion in Q1 2023. Q/q, the company’s performance remained robust, with Revenue increasing by 17.9% from Q4 2023’s N693.49 billion. This remarkable growth is attributed to a combination of price hikes and increased sales volume. While the exact extent of the price adjustment is not disclosed at the time of this report, it is noted that the volume surge was primarily fuelled by a substantial rebound in the company’s Nigerian operations, which saw a 26.1% increase to 4.59 million metric tons from 3.64 million metric tons in Q1 2023. Additionally, Pan African volumes experienced a modest uptick, rising by 3.1% to 2.71 million metric tons from 2.63 million metric tons in the same period. The cumulative effect of these increases resulted in a 12.3% rise in overall group volumes, climbing to 7.04 million metric tons compared to 6.27 million metric tons in Q1 2023.

In Q1 2024, the Cost of Sales (adjusted for depreciation) increased by 152.2% y/y to N353.06bn in Q1 2024 from N140.02bn in Q1 2023. A significant growth in fuel and power consumed (+220.86%) drove the y/y growth in Cost of Sales (adjusted for depreciation). Increases in plant maintenance costs (+137.70%) and materials consumed (103.86%) also contributed to the increase in Cost of Sales. Despite this, Gross Profit climbed by 74.1% y/y to N464.29bn in Q1 2024, up from N266.71bn in Q1 2023. However, Gross Margin fell by 8.8ppts y/y to 56.8% in Q1 2024 from 65.6% in Q1 2023.

Source: Company data, CSL Research

Given the current inflationary environment and the steep Naira depreciation which has negatively impacted operating costs, we saw the company’s Operating Expenses (adjusted for depreciation) rise by 121% y/y to N181.71bn in Q1 2024 from N82.21bn in Q1 2023. The growth in Opex reflects the 118.2% y/y and 132% y/y growth in Selling and Distribution Expenses (adjusted for depreciation) and Administrative Expenses (adjusted for depreciation), respectively. Other income increased by 1765.2% to N27.55 billion in Q1 2024, driven by a notable increase in insurance claims (1130.39% y/y), government grants (30.43% y/y), and other miscellaneous income (1842.60% y/y). EBITDA increased by 66.6% y/y to N309.48bn in Q1 2024 from N185.71bn in Q1 2023 while EBITDA margin contracted by 7.8ppts to 37.9% from 45.7% in Q1 2023. Despite a 87.9% y/y rise in Depreciation and amortization to N54.18bn, Operating Profit climbed by 62.7% y/y to N255.30bn in Q1 2024 from N156.88bn in Q1 2023.

Net Finance Cost increased by 407.3% y/y to N111.83bn in Q1 2024 from N22.05bn in Q1 2023. The rise in Net Finance Cost was driven by a significant increase in Finance Cost, up by 379.01% y/y to N123.23bn in Q1 2024 from N32.51bn in Q1 2023. We attribute the rise in Finance Cost to the FX losses the company recorded in Q1 2024 due to the further devaluation of the Naira. The company’s FX losses rose by 551.39% to N63.77bn in Q1 2024 from N9.79bn recorded in Q1 2023. On the other hand, Finance Income rose to N11.40bn in Q1 2024 from N10.47bn in Q1 2023.

Pre-tax profit was up by 13.3% y/y to N166.40bn in Q1 2024 from N146.82bn in Q1 2023. Tax Expenses grew by 44.00% to N53.73bn in Q1 2024, Consequently, Net Income grew by 2.9% y/y to N112.67bn in Q1 2024 from N109.50bn in Q1 2023. Overall, Earnings per Share settled at N6.68/s in Q1 2024 compared with N6.44/s in Q1 2023.

We have a target price of N480.48/s for Dangote Cement with a SELL recommendation. Current price; N656.7/s.

Kindly click on the below link to download the full report.

​​​​​Dangote Cement Quick Take Q1 2024.pdf​