July 30, 2026/Cordros Report
DANGCEM published its Q2-26 unaudited Q2-26 results after the close of business yesterday (29 July), reporting EPS of NGN19.25 (+4.4% y/y), bringing H1-26 EPS to NGN38.22 (+24.3% y/y). Operating performance remained strong, with revenue rising by 22.2% y/y, EBITDA margin expanding by 234bps y/y to 47.2%, and net finance costs declining by 90.6% y/y. Nevertheless, a significantly higher effective tax rate of 43.3% (Q2-25: 25.6%) tempered earnings growth during the quarter.
DANGCEM’s aggregate revenue increased by 22.2% y/y in Q2-26 (H1-26: +21.4% y/y), driven by favourable pricing and volume dynamics, with average realised price rising by 11.9% y/y to NGN176,181.55/tonne (H1-26: +8.6% y/y) and group sales volumes increasing by 9.9% y/y to 7.47 million tonnes (H1-26: +11.8% y/y). On a quarter-on-quarter basis, revenue increased by 9.8%, reflecting stronger realised prices alongside sustained demand across its operating markets.
On a regional basis, Nigerian operations remained the primary growth driver, with revenue increasing by 26.9% y/y and accounting for 69.2% of group revenue (H1-26: +25.1% y/y). The performance was supported by a 20.1% y/y increase in average realised price to NGN196,803.71/tonne (H1-26: +15.5% y/y to NGN186,171.19/tonne), alongside a 5.2% y/y increase in cement sales volumes to 4.79Mt (H1-26: +8.3% y/y to 9.70Mt). We attribute the volume growth to sustained demand from public infrastructure projects. Export performance also remained strong, with clinker and cement exports surging by c.112.8% y/y to 550.40Kt (H1-26: +62.3% y/y to 1.10Mt), further supporting volume growth.
Similarly, Pan-African operations reported revenue growth of 12.8% y/y, contributing 30.8% of group revenue (H1-26: +13.7% y/y). Revenue growth was driven primarily by an 18.6% y/y increase in cement sales volumes to 3.03Mt (H1-26: +19.0% y/y to 5.95Mt), which more than offset a 4.9% y/y decline in average realised price to NGN133,616.68/tonne (H1-26: -4.5% y/y to NGN130,311.26/tonne). The strong volume performance was largely supported by robust demand across key markets, particularly Ethiopia, Senegal, and Tanzania.
Gross margin expanded by 530bps y/y to 63.9% in Q2-26 (H1-26: +444bps y/y to 63.2%), reflecting the slower growth in cost of sales (+6.6% y/y) relative to revenue (+22.2% y/y). The increase in COGS was primarily driven by higher raw material costs (+42.0% y/y; 24.0% of COGS), largely reflecting increased production volumes, alongside a 7.3% y/y increase in staff costs (8.9% of COGS). Notably, energy costs, which remained the largest component of COGS at 42.0%, declined by 4.9% y/y, reflecting the benefits of previously implemented cost-efficiency initiatives, including the increased use of alternative fuels across the group’s production plants. However, this moderation was outweighed by increases across other cost components.
EBITDA margin expanded by 234bps y/y to 47.2% (H1-26: +166bps y/y to 47.3%), despite a 21.3% y/y increase in operating expenses. The increase in OPEX was primarily driven by haulage expenses (+41.5% y/y; 62.7% of OPEX) and staff costs (+19.5% y/y; 13.2% of OPEX). We attribute the sharp increase in haulage expenses to elevated energy prices during the period, although the impact was partially mitigated by the company’s increased deployment of CNG-powered trucks. On a regional basis, EBITDA margin performance was mixed. Nigerian EBITDA margin declined by 97bps y/y to 59.4% (H1-26: +153bps y/y to 60.1%), while Pan-African EBITDA margin expanded by 218bps y/y to 19.1% (H1-26: -249bps y/y to 17.6%).
Elsewhere, net finance costs declined sharply by 90.6% y/y to NGN649.00 million, primarily reflecting a 76.0% y/y reduction in interest expense. The decline in interest expense was driven by continued debt repayment, which reduced financial liabilities by 74.5% y/y to NGN646.17 billion (Q2-25: NGN2.53 trillion), alongside a lower annualised effective interest rate of 15.5% (Q2-25: 16.5%). In H1-26, net finance costs declined by 6.8% y/y to NGN95.86 billion.
Overall, profit before tax (PBT) increased by 34.0% y/y to NGN560.22 billion, supported by strong operating performance and significantly lower finance costs. However, the benefit to earnings was moderated by a tax charge of NGN242.79 billion, translating to an effective tax rate of 43.3%, resulting in a more modest 2.0% y/y increase in profit after tax (PAT) to NGN317.44 billion. For H1-26, PBT and PAT increased by 34.4% y/y and 22.7% y/y, respectively.
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Comment: DANGCEM delivered a strong operational performance in Q2-26, underpinned by robust pricing in its Nigerian operations and solid volume growth across both its Nigerian and Pan-African businesses. These supported healthy revenue growth and broad-based margin expansion, while the group’s continued deleveraging efforts significantly reduced finance costs, providing an additional boost to profitability. However, the strong operating performance was not fully reflected at the bottom line, as a higher effective tax rate of 43.3% moderated earnings growth. Looking ahead, we expect revenue momentum to remain broadly intact, supported by resilient pricing and sustained infrastructure-led demand in Nigeria, alongside continued volume growth across key Pan-African markets. While seasonal rainfall could result in a modest sequential q/q slowdown in volumes in Q3-26, we expect year-on-year volume and pricing trends to remain favourable. In addition, we do not expect the effective tax rate to remain at Q2-26 levels, which should provide further support for earnings growth in the coming quarters. Our estimates are under review.
