March 11, 2025/InvestmentOne Report
In its FY:2024 audited financial report, Dangote Cement Plc posted a 62.16% revenue growth to NGN3.58trn, up from NGN2.21trn in the previous year. This was mostly driven by price increases and foreign currency translation effect, as group sales volume was marginally up by 1.57% YoY to 27.71 million metric tonnes.
Production cost of sales accelerated by 63.54% YoY to NGN1.65trn, this was due to the high inflationary environment which drove raw material cost up by 47.55% YoY to NGN411.40bn amid elevated energy cost as fuel and power consumed surged by 70.32% YoY to NGN679.94bn. As such, gross margin dipped by 39bps on annual basis to 54.04%.
The core business remained robust as the operating profit accelerated by 156.90% YoY to NGN1.15trn. This was despite the cost pressure seen across the administrative (+74.29% YoY to NGN220.54bn) and selling & distribution (+69.45% YoY to NGN818.66.11bn) line. Haulage expense contributed the most pressure to selling & distribution cost, amounting to NGN535.70bn. Consequently, operating margin fell by 107bps YoY to 32.18%. Additionally, the rise in administrative expenses was due to increases especially in salaries and related staff cost.
Finance Cost Dampen Bottom Line: The Profit Before Tax (PBT) growth came in at 32.44% YoY to NGN732.54bn. The significant dip in the PBT was largely due to the foreign exchange depreciation during the year, alongside the upward adjustment made to the benchmark interest rates by the Central Bank of Nigeria which consequently pushed finance cost to NGN700.30bn. Specifically, interest expense surged by 210.03% to NGN448.08bn due to the rise borrowing cost. Likewise, net foreign exchange loss rose to NGN249.32bn from NGN164.08bn in FY:2023. As a result, PBT margin came in lower by 459bps YoY to 20.46% due to these headwinds.
Profit After Tax (PAT) recorded a modest 10.46% YoY growth to NGN503.25bn as the high finance cost muted the more than impressive topline performance during the period. Nevertheless, Earnings Per Share (EPS) increased to NGN29.74 kobo in FY:2024 from NGN26.47 kobo in FY:2023 – a 12.35% YoY growth supported by the strong revenue posted in the year.
Balance Sheet: As of 31st December 2024, Dangote Cement Plc grew its total asset by 62.57% YoY to NGN6.40trn, driven by increases in property, plant and machinery (+51.09% YoY to NGN3.32trn), prepayments and other current assets (+36.10% YoY to NGN665.07bn), inventories (+10.46% YoY to NGN669.66bn). Furthermore, receivables from related parties stood at NGN1.05trn. Conversely, total liabilities surged by 91.06% YoY to NGN4.23trn, due to the rise in current liabilities. Specifically, short term financial liabilities accelerated by 99.47% YoY to NGN1.25trn. Similarly, trade and other payables rose to NGN992.12trn from NGN619.90bn in FY:2023. At the end of the reporting period, net asset stood at NGN2.18trn.
Outlook: Dangote Cement Plc remains well-positioned for growth, supported by its strong market leadership, capacity expansion and pricing strategy. However, elevated finance costs, driven by high interest rates and foreign exchange volatility, could continue to pressure profitability in the near term. Nonetheless, we believe that Dangote Cement will benefit from increased infrastructure spending by the Nigerian government, projected at NGN4.06trn. Additionally, the company’s export strategy across Africa is expected to provide foreign exchange earnings that could help mitigate currency depreciation risks. While macroeconomic uncertainties persist, we believe Dangote Cement’s strategic market dominance and strong fundamentals, will enable it to maintain steady earnings growth in FY:2025. We hence place a NEUTRAL rating on DANGCEM.
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