October 25, 2025/Cordros Report
DANGCEM published their Q3-24 unaudited financials today (25 October), reporting a 9.9% y/y decline in Q3-24 standalone PAT with EPS declining by 6.8% y/y to N5.29. The earnings decline was mainly due to a 60.4% y/y growth in COGS (ex-depreciation), and a 406.3% y/y increase in net finance costs. However, for 9M-24, the company reported EPS of NGN16.55 (9M-23: NGN16.08).
DANGCEM’s aggregate revenue surged by 42.0% y/y in Q3-24 (9M-24: +69.1% y/y), driven by broad-based expansion across the Nigerian (+71.7% y/y, 67.5% of revenue) and Pan African (+13.8% y/y, 35.8% of revenue) operations. Revenue growth in Nigeria was fueled by a 6.6% y/y growth in sales volume to 4.17Mt and a 101.2% y/y hike in cement price during the period. Management credited the revenue growth to promotional activities and enhanced route-to-market strategies, which increased market presence and offset the impact of higher rainfall and flooding during the period. In the Pan-African market, revenue growth was driven by a 21.8% y/y increase in price. Meanwhile, the region witnessed a 6.6% decline in sales volume to 2.86Mt, which was largely due to adverse weather conditions in Tanzania. Overall, group sales volumes fell by 1.9% y/y to 6.74Mt (9M-24: +1.9% y/y to 20.67Mt), with the average price per tonne rising by 44.7% y/y (9M-24: +65.9% y/y).
Gross margin contracted by 525bps y/y to 54.3% (9M-24: -616bps y/y to 56.9%) due to the heightened cost of sales ex-depreciation (+60.4% y/y). We attribute the rise in the cost of sales to higher energy (+62.6% y/y | 43.7% of COGS) and raw material (+47.5% y/y | 27.1% of COGS) costs. Similarly, the group’s EBITDA margin declined by 864bps y/y to 30.3% in Q3-24 (9M-24: -831bps y/y to 35.4%), following a 65.2% y/y surge in operating expenses (ex-depreciation), due to a 70.5% y/y increase in haulage costs (70.3% of OPEX).
Net finance costs surged by 406.3% y/y to NGN114.37 billion in Q3-24, primarily due to a 135.8% y/y increase in interest expense, exacerbated by a NGN20.78 billion FX loss (vs FX gain of NGN14.61 billion in Q3-23). The surge in net finance costs reflects the impact of the high-interest rate environment and naira depreciation. Similarly, in 9M-24, net finance costs grew by 149.1% y/y to NGN422.09 billion, driven by higher interest expenses (+152.5% y/y) and FX losses (+124.3% y/y).
As a result, PBT declined by 31.3% y/y to NGN113.43 billion in Q3-24. Despite a substantial reduction in tax charges (-63.3% y/y to NGN24.24 billion), PAT fell by 9.9% y/y to NGN89.19 billion.
Management call on Wednesday 30th October at 2.00 pm Nigerian time. Click here to register.
Comment: While DANGCEM reported robust revenue expansion, headwinds from a high-cost environment and elevated interest rates compressed margins and moderated earnings growth. Looking ahead, we expect top-line performance to remain solid in Q4-24, largely driven by price increases but remain cautious about volume growth following indications of minimal capital expenditure implementation from the federal government, as well as challenging weather conditions in the Pan-African region. Furthermore, persistent cost pressures are likely to constrain margins and impact overall earnings. Our estimates are under review.
