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…Pay N310.5bn in taxes amid profit slump
By Chukwuma Umeorah
Nigeria’s top cement manufacturers are facing a harsh cost surge, as production expenses soared to N1.36 trillion in the first half of 2025, up from N1.19 trillion in the same period of 2024.
The development tightened profit margins and deepened industry concerns over rising inflation, energy prices and unfavourable economic headwinds.
According to the half-year unaudited financial results for Dangote Cement Plc, Lafarge Africa Plc and BUA Cement Plc posted on the Nigerian Exchange Limited (NGX), the rise, driven by persistent inflation and escalating energy costs, had squeezed profit margins across the sector. Additionally, the industry paid N310.5 billion in taxes, a 77.4 per cent increase from N174.9 billion in H1 2024, reflecting higher profitability but reducing net financial gains for the companies.
The combined production costs comprised N853.6 billion from Dangote, N221.2 billion from Lafarge, and an estimated N294.5 billion from BUA, with key expenses tied to materials, fuel, and power. According to the financial reports, Dangote’s manufacturing costs rose slightly by 2.4 per cent to N853.6 billion, with fuel and power costs alone accounting for N387.2 billion, up from N374.8 billion in H1 2024. Lafarge’s production costs surged 49.5 per cent to N221.2 billion, driven by a 52.4 per cent increase in production variable costs to N146.6 billion.
BUA’s cost of sales increased 15.6 per cent to N294.5 billion, reflecting similar pressures from rising energy and material expenses.
Despite inflationary pressures witnessing a gradual decline within the period under review, Nigeria’s inflation rate, reported at 22.2 per cent in June 2025 by the National Bureau of Statistics, and volatile global energy prices were cited as primary drivers of these cost increases.
The industry also faced a 25.8 per cent rise in selling and distribution expenses, reaching N553.9 billion in H1 2025 from N440.1 billion in H1 2024. Dangote’s selling and administrative expenses grew 10.5 per cent to N445.7 billion, despite a 4.2 per cent reduction in haulage costs due to cost containment measures. Lafarge reported a 44.3 per cent increase in selling and distribution costs to N77.4 billion, while BUA’s selling and distribution expenses rose 82.9 per cent to N29.8 billion. These increases were attributed to higher logistics costs compounded by challenges in transportation and distribution networks across Nigeria and pan-African markets.
Even with these cost pressures, the cement sector achieved a combined profit after tax (PAT) of N834.5 billion, representing a 266 per cent surge from N227.5 billion in H1 2024. Dangote led with a profit after tax of N520.5 billion, up 174.1 per cent from N189.9 billion, followed by Lafarge with N132.7 billion, a 352 per cent increase from N29.4 billion, and BUA with N180.9 billion, up 428 per cent from N34.3 billion.
Total revenue for the sector grew 38.3 per cent to N3.17 trillion, with Dangote contributing N2.07 trillion, up 17.7 per cent. Lafarge recorded N517 billion, a 74.9 per cent increase while BUA posted N580.3 billion up by 59.4 per cent. This revenue growth was driven by strategic price adjustments to offset inflation, particularly in Nigeria, where Dangote’s revenue rose 45.5 per cent to N1.44 trillion due to pricing strategies.
Chief Executive Officer of Dangote Cement, Arvind Pathak, highlighted the sector’s resilience, “We are pleased to report a solid performance in the first half of 2025, underscoring the strength, resilience, and adaptability of our business amidst improvements in key macroeconomic indicators.”
The sector’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) rose 53.5 per cent to an estimated N1.45 trillion, with Dangote’s EBITDA increasing 41.8 per cent to N944.9 billion (45.6 per cent margin), Lafarge’s estimated at N209.1 billion, based on operating profit plus depreciation, and BUA’s at approximately N300 billion.
However, the industry faced a 5.3 per cent decline in sales volumes, totaling 22.8 million tonnes in H1 2025 compared to 24.1 million tonnes in H1 2024. Dangote reported a 4.1 per cent volume drop to 13.4 million tonnes, with Nigeria volumes nearly flat at 9.0 million tonnes due to slowdowns in real estate and private construction projects. Lafarge and BUA experienced similar volume declines, estimated at 9.4 million tonnes combined, driven by reduced consumer spending and delays in government infrastructure projects across Nigeria and pan-African markets. In Nigeria, economic recovery remained uneven, with lower crude oil prices reducing hard-currency revenues and constraining construction activity.
Beyond production costs, tax obligations further impacted net gains, with the sector’s combined tax charge rising to N310.5 billion. Dangote’s tax charge doubled to N209.6 billion, Lafarge’s increased 287.8 per cent to N67.1 billion, and BUA’s grew 477 per cent to N33.9 billion. This reflected the higher profitability but also highlighted the fiscal burden on the industry, particularly in Nigeria, where fiscal consolidation and foreign exchange reforms had increased tax liabilities.
On the bright side, these cement companies demonstrated a commitment to shareholders, distributing N666.4 billion in dividends. Dangote paid N502.6 billion, approved at its Annual General Meeting, while Lafarge declared N83.8 billion. There was no specified dividend payout for BUA for H1 2025, however they paid N13.00 for the year ended December 2024. Earnings per share (EPS) for the industry averaged N48.43, up 245 per cent from N14.01 in H1 2024, with Dangote at N30.74 (up 173 per cent), Lafarge at N8.24 (up 352 per cent), and BUA at N5.34 (up 428 per cent).
Operationally, the industry made strides in cost management. Dangote began the phased delivery of 1,600 CNG-powered trucks, reducing logistics costs and enhancing environmental efficiency. “Our strategic priorities remain focused on long-term value creation. We have made significant progress in further strengthening our cost architecture,” Pathak noted. Lafarge’s cost containment measures contributed to an operating profit of N192.3 billion, up 143.7 per cent, while BUA’s operational efficiencies supported a 199.4 per cent increase in operating profit to N245.4 billion.
Net debt for the sector rose 2.1 per cent to an estimated N2.5 trillion, with Dangote’s net debt at N2.01 trillion, down from N2.06 trillion. Capital expenditure totaled N258.1 billion, with Dangote spending N166.3 billion, Lafarge N28.9 billion, and BUA’s estimated at N63 billion. Investments focused on new plants, distribution trucks, and energy efficiency upgrades, reflecting the sector’s commitment to long-term growth.
Meanwhile, macroeconomic conditions posed ongoing risks. The International Monetary Fund downgraded its global GDP forecast to 2.8 per cent for 2025, citing trade tensions and climate-related shocks. Sub-Saharan Africa’s growth was projected at 3.8 per cent, down from 4.0 per cent in 2024, with tight financial conditions and debt burdens limiting fiscal space. In Nigeria, the naira’s relative stability, moving from N1,549/$ at year-end 2024 to N1,532/$ by June 2025, supported financial performance, but lower crude oil prices and structural bottlenecks constrained demand.
The cement sector’s financial position remained robust, with combined total assets of N8.7 trillion, up 3.5 per cent from N8.4 trillion at year-end 2024. Dangote’s assets grew 3.3 per cent to N6.62 trillion, Lafarge’s rose 3.7 per cent to N1.03 trillion, and BUA’s were estimated at N1.05 trillion.
Chief Executive Officer of Lafarge Africa, Lolu Alade-Akinyemi, emphasised that industry players must remain adaptable in the face of shifting macroeconomic conditions. “Looking ahead, and mindful of the ever-evolving macroeconomic landscape, we are confident in our ability to continue delivering value by focusing on our strategic priorities, while leveraging innovation and green growth in line with our sustainability ambitions,” he said.
