Dangote Cement Plc has reported a profit before tax of N732.537 billion for the financial year ended 31 December 2024, marking a 32.44 per cent year-on-year (YoY) increase from 2023.
According to the company’s annual report and financial statements, full-year revenue surged by 62.16 per cent YoY to N3.581 trillion. This growth was primarily driven by strong revenue from Nigeria, which accounted for 57 per cent of total earnings, derived from cement and clinker sales.
In line with its dividend policy, the Board of Directors has recommended a dividend of N30.00 per share for the 2024 financial year, maintaining the same level as in 2023. The Board stated that this decision aligns with the company’s strategic growth objectives and reinforces investor confidence.
The 62.16 per cent YoY increase in revenue to N3.581 trillion was underpinned by strong performance across key markets: Nigeria: N2.064 trillion (+64 per cent YoY); Pan-Africa: N1.4 trillion (+57 per cent YoY).
While both segments experienced robust growth, Nigeria remains the dominant revenue contributor, accounting for approximately 58 per cent of total revenue.
Despite this revenue surge, the company’s total production capacity remained at 52 million tonnes, indicating that the increase was achieved within existing infrastructure, without major capacity expansions.
Production volume: 26.951 million tonnes (+1.01 per cent YoY); Sales volume: 27.708 million tonnes (+1.57 per cent YoY).
The modest increase in production and sales volumes (both under 2 per cent) suggests that the revenue surge was not volume-driven. Instead, it was likely influenced by higher pricing, improved product mix, and possibly foreign exchange effects. This aligns with broader industry trends, where pricing strategies and currency adjustments significantly impact revenue growth.
The increase in sales volume, albeit modest, suggests that demand remains resilient despite price increases. This indicates that Dangote Cement has pricing flexibility without significantly hurting demand.
The 57 per cent YoY growth in Pan-African revenue highlights the company’s successful expansion outside Nigeria, reducing its reliance on the domestic market and mitigating risks associated with macroeconomic uncertainties such as inflation and currency fluctuations.
The cost of sales grew faster than revenue, driven by rising raw material costs and high fuel expenses, which accounted for over 67 per cent of total costs. Despite these pressures, Dangote Cement maintained a strong gross profit margin of 54 per cent, indicating that cost of sales consumes about half of the company’s revenue.
Selling, distribution, and administrative expenses increased significantly, collectively absorbing 56 per cent of gross profit. As a result, the operating profit margin declined to 32 per cent, down by 3.24 per cent from 2023. However, this margin remains solid, reflecting the company’s ability to sustain profitability despite rising costs.
Finance income surged to N169 billion, supported by gains on the net monetary position. However, finance costs soared to N700.299 billion, primarily due to: Interest expense: N448 billion (+210 per cent YoY); Foreign exchange loss: N249 billion (+52 per cent YoY).
The high interest expense is attributed to a 286 per cent increase in net debt, which rose to N2.182 trillion in 2024. Consequently, the interest coverage ratio declined to 2.57x from 5.08x in 2023, reflecting a reduced ability to cover interest obligations.
The company’s balance sheet expanded significantly, with total assets growing by 62 per cent, while shareholders’ funds also increased. This resulted in a stable leverage ratio of 2.94x, suggesting a relatively balanced financial position.
However, the asset turnover ratio declined by 0.56 per cent, indicating a reduction in efficiency in utilising assets to generate revenue. With declines in both asset turnover and net profit margin, return on equity (ROE) fell to 23.14 per cent, despite a marginal increase in leverage. Nonetheless, ROE remains at a decent level, reflecting sustained profitability.
Dangote Cement’s retained earnings remain strong at N1.027 trillion, supporting the company’s ability to maintain its dividend payout. The Board has declared a dividend of N30 per share for the 2024 financial year, maintaining the same level as in 2023.
How this will impact share price performance depends on market sentiment, as the stock has only returned 0.25 per cent year-to-date (YtD) as of February 2025.
Short-term concerns: Rising debt and finance costs could put pressure on margins. Long-term opportunities: Strong revenue growth, stable margins, and a consistent dividend payout. Key watch areas: Debt management, cost control, and efficiency improvements.
Despite short-term financial pressures, Dangote Cement remains well-positioned for sustained profitability and growth, supported by its strong market presence, pricing power, and strategic expansion initiatives.
