Dangote Cement H1 2022: Big FX Losses and Lower Volumes

Dangote Cement’s half-year profit for the six months ended June 2022, surprisingly dipped. While revenue grew from 17.2% from N690.5 billion in 2021 to N808 billion in 2022, profit after tax fell by 10.2% from N191 billion in 2021 to N172.1 billion in 2022.

What led to the decline?

Finance costs jumped by147% from N30.3 billion in 2021 to N75.2 billion in 2022. The sharp rise in finance costs was due to foreign exchange losses which jumped from N4.9 billion in 2021 to N40.6 billion in 2022.

Volumes are also down

The volume of cement sold at the company level (Nigerian operations) and group level (operations across Africa) declined. Group sales volumes declined by 7% to 14.2 million tonnes. Nigerian volumes fell by 5.3% to 9.3 million tonnes.

Energy costs are up

Like everyone else, energy costs are spiking. Fuel and energy costs moved up sharply within the period, up by 31% from N98.9 billion in 2021 to N129.9 billion in 2022.

Will dividend payout drop?

We don’t anticipate dividend payout dropping, as earnings per share only fell marginally from N11.21 in 2021 to N10.10 in 2022, down by 9.9%.