March 3, 2025/Cordros Report
Dangote Cement Plc (DANGCEM) released 2024FY audited results on Friday (28 February), reporting a 12.3% y/y increase in EPS to NGN29.74 (2023FY: NGN26.47). This growth was primarily driven by a 62.2% surge in revenue, supported by a 59.7% increase in pricing amid modest volume growth (+1.6% y/y). The board proposed a final dividend of NGN30.00 per share, representing a dividend yield of 6.3% based on the closing price of NGN480.00 per share (28 February).
DANGCEM’s aggregate revenue rose 62.2% y/y to NGN3.58 trillion in 2024FY (Q4-24: +47.1% y/y to NGN1.02 trillion) as the average price per tonne increased by 59.7% to NGN129,224.41, while volumes inched up by 1.6% y/y to 27.71Mt. On geographical performance, Nigerian operations revenue surged by 63.7% y/y to NGN2.19 trillion (58.6% of total revenue), while Pan-Africa operations revenue grew by 60.0% y/y to NGN1.48 trillion (41.4% of total revenue).
Revenue growth in Nigeria was driven by a c.56.6% y/y upward adjustment in cement prices and a 7.9% y/y increase in sales volume to 17.68Mt. Management attributed the volume growth to enhanced operational efficiency, citing the launch of the Distributor Management System (DMS), which allowed customers to independently manage sales transactions and track deliveries remotely. Additionally, the company reported a 69.1% increase in cement and clinker exports at 1.20Mt, with thirty-one (31) clinker shipments delivered to Ghana and Cameroon. In the Pan-African market, revenue expansion was primarily driven by a c.61.7% y/y increase in pricing, amid a 1.1% y/y decline in sales volume to 11.13Mt, which was attributed to adverse weather conditions in Tanzania and election-related uncertainties in Senegal.
Meanwhile, gross margin declined by 64bps y/y to 59.3% in 2024FY due to a steep 64.8% y/y increase in the cost of sales (excluding depreciation). The surge in cost of sales is attributable to higher energy costs (+70.3% y/y | 46.7% of COGS) and raw material expenses (+47.5% y/y | 28.3% of COGS). The escalation in costs underscored the impact of rising diesel prices (+43.4%), and the depreciation of the naira (-40.1%), significantly inflating the cost of imported materials. However, in Q4-24, the company saw gross margin improvement of 12.21ppts y/y to 65.5%, as cost of sales growth slowed to 8.6%, while revenue surged by 47.1% y/y.
At the same time, EBITDA margin declined by 209bps y/y to 38.0% in 2024FY, weighed down by a 76.9% increase in operating expenses (ex-depreciation). This increase was primarily driven by elevated haulage costs (+73.1% y/y | 65.3% of OPEX) during the period. In Q4-24, EBITDA margin improved by 14.29ppts y/y to 46.4%, as OPEX growth slowed to 38.3% y/y, reflecting a more tempered rise in haulage expenses at 33.7%. We attribute this improvement to the stabilisation in diesel costs, alongside the company’s strategic shift toward alternative energy sources, particularly the introduction of Compressed Natural Gas (CNG) trucks during the period.
Elsewhere, net finance costs surged significantly by 87.5% y/y to NGN531.73 billion in 2024FY, (Q4-24: -3.9% y/y to NGN109.64 billion) driven primarily by higher FX losses (+52.0% y/y to NGN249.32 billion) and interest expenses (+210.0% y/y to NGN448.08 billion), which offset the growth recorded in interest income (+515.1% y/y to NGN168.57 billion). The rise in FX losses reflects the impact of naira depreciation (-41.0% y/y), while the sharp increase in interest expenses underscores the effect of a higher average effective interest rate on borrowed funds (+850bps y/y to 25.8%) and a 38.4% y/y expansion in gross debt to NGN2.55 trillion with NGN1.82 trillion debt added during the period. We note that the net finance cost decline in Q4-24 was due to a staggering 19.7x increase in interest income, which helped cushion the impact of elevated borrowing costs.
Consequently, profit before tax increased by 32.4% y/y to NGN732.54 billion in 2024FY (Q4-24: +52.9% y/y to NGN326.15 billion), while profit after tax increased by 10.5% y/y to NGN503.25 billion (Q4-24: +25.9% y/y to NGN225.15 billion).
Comment: DANGCEM delivered strong revenue growth across both its Nigerian and Pan-African operations, leveraging premium pricing and modest volume growth. However, rising inflation, elevated interest rates, and currency pressures weighed on margins. That said, Q4-24 saw a notable improvement in profitability, driven by cost efficiencies and stabilising macroeconomic conditions. In 2025, we expect volume growth to be the key revenue driver, with limited scope for significant price hikes. Additionally, EBITDA margin and EPS are projected to improve, supported by a more stable naira, and continued cost savings from the company’s alternative fuel strategy and the phased deployment of CNG trucks in its distribution network. Our estimates are under review.
