Dangote Cement expects to increase earnings in 2016

Byjirong

Updated Fri, 29 Apr 2016 15:02:03 GMT

Bloomberg are reporting that Dangote Cement expects to increase earnings in 2016 as cement volumes rise, despite an economic downturn in its home market of Nigeria and pressures elsewhere on the continent.

Demand in the company’s home market of Nigeria should remain strong this year, following a price cut announced by Dangote in September and supported by government infrastructure development plans.

While Dangote’s cement volumes surged 70% in the three months through March, Dangote’s profit margins have come under pressure as a result of the price cut and as it ramps up new factories that operate in countries with lower charges. Dangote reported group operating margins of 40% for Q1, compared with 51% in the previous year, while its cost of sales rose 56%.

Profit for the period was 52.8 billion naira (US$266 million) in the three months through March, compared with 68.6 billion naira a year earlier. The decline was largely a result of a considerable foreign-exchange gain last year that wasn’t repeated. Revenue rose 23% to 140.5 billion naira.

Dangote announced last month that it plans to increase annual cement capacity to about 77 million t by the end of 2019, from 43.6 million last year. The company has already more than doubled cement capacity since 2013, adding new factories in Cameroon, Ethiopia, Senegal, South Africa, Tanzania and Zambia.

The company recently started work on new plants in Nigeria and Ivory Coast and signed a memorandum of understanding for the financing and construction of its next string of projects in Nigeria and elsewhere.