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HomeCompany NewsDangote Cement posts N99.0 bln exchange rate gain, operating profit up N734.2...

Dangote Cement posts N99.0 bln exchange rate gain, operating profit up N734.2 bln  

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By Samuel Bankole

Dangote Cement, a powerhouse in the cement industry, recently unveiled its robust financial results for the fiscal year 2023, showcasing a commendable revenue surge and strategic insights into its operational landscape.

In its filing with the Nigerian Exchange Limited (NGX), Dangote Cement reported a substantial year-on-year revenue increase of 36.4%, reaching N2,208.1 billion in FY23 compared to N1,618.3 billion in FY22.

The fourth quarter of 2023 contributed significantly to this growth, with a remarkable 57.2% year-on-year increase, totaling N693.5 billion. Noteworthy was the stellar performance of Pan-Africa, boasting a remarkable 123.2% growth coupled with a steady 7.7% revenue increase in Nigeria.

The key driver behind the impressive sales growth was attributed to strategic price adjustments aimed at offsetting the impact of heightened inflation, reflecting the company’s adaptive approach to market dynamics.

However, this solid revenue growth faced headwinds from increased sales costs and a substantial uptick in finance costs. The total sales volume slightly dipped to 27,280 kilotonnes in FY23, marking a 1.8% decrease from 27,767 kilotonnes in FY22.

Despite the challenges, Dangote Cement showcased a robust gross profit, which rose by 25.8% year-on-year to N1,201.8 billion in FY23, emphasising the company’s operational resilience.

The group’s EBITDA margin witnessed a marginal decline of 358 basis points year-on-year, settling at 40.2% in FY23. Contributing to this was a 23.7% year-on-year increase in selling and distribution expenses, primarily attributed to escalated haulage costs.

Administrative expenses for the company grew by 58.4% year-on-year to N126.5 billion in FY23.

This surge was fueled by increased salaries and related staff costs, reaching N36.5 billion, along with a notable rise in general administrative expenses to N14.0 billion in FY23.

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Dangote Cement’s other income experienced an impressive surge of 367.9% to N25.0 billion in FY23.

This surge was attributed to various income streams, including N7.0 billion generated from selling materials to related parties. Consequently, the company recorded a 25.3% year-on-year increase in operating profit, totaling N734.2 billion in FY23.

However, the operating margin faced a modest deterioration of 295 basis points year-on-year, settling at 33.3% in FY23.

Dangote Cement reported a 29.2% year-on-year decline in finance income, amounting to N27.4 billion, while finance costs witnessed a significant 138.5% year-on-year increase to N311.0 billion in FY23, primarily due to a foreign exchange loss of N164.1 billion.

Dangote Cement reported a robust gain of 248.6% year-on-year in monetary positions, totaling N101.2 billion in FY23. The profit before tax reflected a 5.6% year-on-year increase, standing at N553.1 billion.

Benefiting from a lower effective tax rate of 17.6% in FY23 compared to 27.0% in FY22, the profit after tax surged by 19.2% year-on-year, reaching N455.6 billion in FY23 against N382.3 billion in FY22.

The group’s earnings per share demonstrated a positive trajectory, standing at N26.47 in FY23, a notable increase from N22.27 in FY22.

Delving into the quarterly performance, the 4Q23 revenue soared by 57.2% year-on-year to N693.5 billion, while the cost of sales experienced a significant 103.0% year-on-year increase to N363.5 billion in FY23.

Selling and distribution expenses in the same period increased by 36.5% year-on-year to N112.5 billion, while finance costs surged to N219.9 billion in FY23 from N3.8 billion in FY22.

Dangote Cement reported an exchange gain on FX-denominated transactions of N99.0 billion in 4Q23, contributing to a 5.2% year-on-year increase in net profit compared to the prior quarter.

Despite the commendable financial performance, the net margin witnessed a decline of 1,269 basis points year-on-year, while the EBITDA margin contracted by 1,129 basis points year-on-year.

In a move highlighting commitment to shareholder value, Dangote Cement proposed a final dividend of N30.00 per share on February 29, 2024 (FY22: N20.00 per share).

This proposal is subject to appropriate withholding tax and shareholder approval, with the final dividend set to be payable on April 29, 2024, to all shareholders registered in the company’s books as of Monday, April 15, 2024.

The dividend announcement underscores the company’s commitment to delivering value to its shareholders amidst a dynamic business landscape.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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