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By Chinwendu Obienyi
The jump in revenues of some cement companies quoted on the Nigerian Exchange Limited (NGX) under the Industrial goods segment has been attributed to strong demand from the private sector amid double-digit inflation, forex crisis as well as supply chain disruptions witnessed all over the world in 2021.
Market operators and some analysts, have argued that the disruptions led to unprecedented raw materials and input price increases in the production of cement, underpinned by the recovery in activities in the real estate sector who are major users of cement.
The COVID-19 outbreak had become a global threat that led to the shutdown of economies around the world in 2020 with analysts saying it would negatively impact consumer demand and businesses especially revenue generation from Nigerian companies in 2021.
However, Daily Sun analysis of some of the results filed by top tier companies on the NGX, revealed that three companies had a staggering revenue of up to N551.78 billion as against N441 billion recorded in 2020.
The companies include; BUA Cement, Dangote Cement and Lafarge Africa Plc.
For instance, BUA Cement one of the cement producing giants of Nigeria, owned by Africa’s fifth richest man, Abdulsamad Rabiu, in its 2021 full year report, revealed a 22.87 per cent growth in its revenue from N209.4 billion recorded in 2020’s full-year report compared to N257.3 billion recorded in 2021.
Currently trading at N70.75 per share, the company’s profit after tax (PAT) grew by 26.81 per cent from N72.3 billion to N91.7 billion while earnings per share (EPS) came in at 26.64 per cent despite the unfavourable economic conditions.
In the same vein, Dangote Cement Plc, declared that its revenue increased by 34 per cent from N1.03 billion recorded in 2020 to N1.38 billion in 2021. According to its Consolidated and Separate Financial Statements for the period, the group’s net profit rose by 32 per cent to N364 million from N276.1 million recorded in corresponding period of 2020 while its profit before tax (PBT) increased by N538.36 million from N373.3 million.
Similarly, Lafarge revealed in its records that its revenue rose from N230.57 billion in 2020 to N293.1 billion by the end of 2021 while its full year profit rose to N51 billion from N30.84 billion recorded in 2020.
Commenting, the Chief Executive Officer, Lafarge Africa, Khaled El Dokani, said the company was quite pleased with its performance in 2021 compared to FY 2020 results while adding that it will continue to maximise volume opportunities across markets and actively manage its costs given that it expects good demand momentum in 2022.
For analysts at Nairametrics, “inflationary pressure as a result of the forex crisis the country faced and is currently facing, ultimately led to an increase in the price of cement in 2021. This had a positive effect on the revenues of these companies”.
On the other hand, analysts at Cordros Research, said, “We believe the double-digit growth was supported by strong demand from the private sector, underpinned by the recovery in activities in the real estate sector. We are impressed that these companies exerted its pricing power in the Nigerian cement market. However, we expect the momentum in private sector demand for cement to moderate in the full year of 2022, given the substantial hike in cement prices. In addition, we believe electioneering activities will also weigh on public sector demand, particularly in the half year of 2022”.
