August 10, 2026/InvestmentOne Report
Dangote Cement Plc sustained the positive momentum seen in Q1:2026, with H1:2026 revenue rising by 21.35% YoY to NGN2.51trn as group volumes rebounded by 11.79% to 14.94MMT. The stronger volume base was complemented by pricing and mix, with group revenue per tonne increasing by 8.6% YoY. Nigeria remained the earnings anchor: domestic volumes increased by 8.33% to 9.70MMT, revenue advanced by 25.17% to NGN1.81trn and revenue per tonne rose by 15.5%. Nigerian cement and clinker exports also surged by 62.3% to 1.10MMT, supported by 20 clinker shipments to regional markets. The domestic backdrop remained supportive, with NBS reporting 3.89% real GDP growth in Q1:2026 and construction’s contribution to real GDP rising to 4.85% from 4.74%.
Pan-African volumes expanded by 19.05% to 5.95MMT, supported by Ethiopia, Tanzania, Senegal and the Côte d’Ivoire ramp-up. Manufacturing costs increased by only 8.29% to NGN924.31bn, below revenue and volume growth, while fuel and power costs declined marginally to NGN384.49bn. Consequently, manufacturing costs per tonne fell by 3.1%, reflecting the improved energy mix and operating efficiencies highlighted by management. On our calculations, implied gross margin expanded by 443bps YoY to 63.23%.
Operating leverage remained strong despite distribution-cost pressure. Administration and selling expenses increased by 21.27% YoY to NGN540.49bn, with management attributing the rise largely to higher haulage expenses. Nevertheless, operating profit grew by 30.66% to NGN1.06trn, lifting operating margin by 300bps to 42.15%. Nigeria EBITDA rose by 28.43% to NGN1.09trn and margin strengthened by 150bps to 60.1%.
In contrast, Pan-African EBITDA declined marginally by 0.43% to NGN136.57bn despite strong volumes, causing margin to contract by 250bps to 17.6%. Pan-African revenue per tonne fell by 4.5%, while weaker Ghana and Cameroon volumes and the early Côte d’Ivoire ramp-up offset stronger markets elsewhere. The disclosure does not provide a complete country-level EBITDA bridge, but the movement points to less favourable regional pricing/mix and weaker earnings conversion than in Nigeria.
Deleveraging and Cash Generation Strengthen Pre-Tax Earnings: Net finance cost eased by 6.85% YoY to NGN95.86bn, as interest expense and other finance costs fell sharply to NGN67.07bn from NGN216.16bn. Although the CBN reduced the MPR by 50bps to 26.5% in February and retained it thereafter, the magnitude of the improvement suggests balance-sheet deleveraging was the more important driver. Cash nearly doubled to NGN796.28bn while debt declined to NGN581.04bn, moving the group to NGN215.23bn net cash from NGN682.92bn net debt at FY:2025.
This was supported by NGN1.06trn net operating cash flow and NGN500.29bn of loan repayments, despite NGN354.17bn capex. However, NGN229.47bn of supplier credit also supported liquidity. PBT increased by 34.43% to NGN981.39bn and PBT margin expanded by 380bps to 39.04%. A higher tax charge moderated bottom-line conversion, with the effective tax rate rising to 34.94% from 28.71%; PAT therefore grew by 22.69% to NGN638.53bn, while EPS increased by 24.33% to NGN38.22.
Sequential Performance: On an analyst-derived basis, Q2:2026 revenue was NGN1.32trn, up 9.84% QoQ and 22.19% YoY, while volumes were broadly flat QoQ at 7.47MMT, suggesting pricing/mix carried more of sequential growth. Implied Q2 gross margin improved to 63.86% from 62.54% in Q1:2026 and PBT rose 33.02% QoQ to NGN560.22bn. However, PAT eased by 1.14% QoQ to NGN317.44bn as the implied Q2 effective tax rate increased to 43.3%, making taxation the key constraint on sequential earnings conversion.
OUTLOOK:We expect H2:2026 performance to remain supported by Nigerian volume growth, pricing discipline, export momentum and production-cost efficiency. The 6.00MMTPA Itori integrated plant, which management expects to complete before year-end, should strengthen medium-term production and export capacity, while the C te d’Ivoire ramp-up and 300 CNG trucks commissioned in Tanzania provide additional Pan-African volume and logistics-efficiency upside.
The move into net cash should also reduce financing pressure and provide capacity to fund expansion. Nonetheless, the weaker Pan-African margin, elevated haulage costs and higher H1 effective tax rate remain earnings risks, while renewed energy-price volatility could pressure distribution costs. Overall, we expect the group’s volume recovery, improving cost structure and stronger balance sheet to support continued earnings growth. At our target price of NGN1,282.22 relative to a reference market price of NGN1,034.00, the stock offers 24.0% upside; consequently, we place a STRONG BUY recommendation on DANGCEM.
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