Nigeria’s three biggest cement manufacturers are witnessing mega increase in their sales revenue which rose over N2.4tn in June 2024 but the companies are experiencing dwindling profits.
In the first half of 2024, the top cement firms, Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc saw a 76.66 per cent surge in sales revenue year-on-year compared to N1.36tn posted in June 2024, according to analysis by NewsNGR.
The jump in sales revenue was fueled by a series of cement price hikes in the period which led to a 50-kilogram bag to sell for over N9,000 and N13,000 depending on location, a surge from about N6,400.
“I just got a document this morning where three companies producing cement, Dangote, BUA and Lafarge, said in 2023, the total cost of their gas rose by over 42 per cent. So, if the cost of their gas rose by 42 per cent and then the import duty exchange rate has also gone up, it is expected that the cost of cement would go up,” the Minister of Works, Dave Umahi, explained the surge in prices.
The surge in prices translated to an N2.4tn revenue with Dangote Cement earning N1.76tn, while BUA Cement and Lafarge declared N363.9bn and N295.57bn respectively.
However, the high revenues did not translate to higher profits for the cement manufacturers. The cumulative profit declared by the three manufacturers declined by 9.54 per cent from N277.69bn in June 2023 to N253.5bn in the first half of 2024.
Only Dangote Cement saw a rise in profits year-on-year while BUA and Lafarge posted a decline.
An analysis of the companies showed that Dangote Cement saw a revenue surge from N950.8bn in 2023 first half to N1.760tn in June 2024, a rise of 85 per cent.
Dangote controlled 72.7 per cent of sales revenue generated by the three companies in the first half of 2024.
The company owned by Aliko Dangote also posted a N189.9bn profit after tax in the first-half of 2024, up by 6.3 per cent from the N178.6bn realised in June 2023.
BUA Cement saw its revenue rise from N221bn to N363.94bn year-on-year which is a 64.6 per cent rise. In the first half of 2024, BUA Cement sales accounted for 15 per cent of the total sales made by the manufacturers.
But the cement firm reported a fall in profit after tax from N63.6bn in June 2023 to N34.25bn in the first half of 2024. This represents 85.7 per cent decline in profit after tax.
BUA Cement saw a surge in the cost of sales rising from N114.94bn in June 2023 to N254.65bn in the first half of 2024.
The cement maker was also hit by a foreign exchange loss of N39.97bn, up from the N2bn FX loss declared last year.
Lafarge Africa saw a jump in revenues by 49.5 per cent from N197.68bn in June 2023 to N295.57bn in June 2024, and the company was not insulated from the wave of dwindling profit after tax experienced in the industry.
Lafarge only got 12.2 per cent of the entire cement sales made by manufacturers during the period.
The company’s profit after tax fell 17.3 per cent from N35.47bn in June 2023 to N29.35bn in June 2024. The company blamed the fall on foreign exchange loss.