Dangote Cement had a pretty dull year due to a sharp rise in operating costs,  finance costs and thin volume growth. The spike in finance costs were in the African subsidiaries. 

Group operations 

Revenue went up from N2.2 trillion in  2023 to N3.5 trillion in 2024 Up 62.1% year on year 

Operating profit went up from N734 billion in 2023 to N1.1 trillion in 2024/ Up 56.8% yoy

Profit after tax rose marginally from N455 billion in 2023 to N503 billion in 2024. Up 10.4% year on year 

Ethiopian revenues were an outlier as they fell sharply. Down 28.6% from N354 billion in 2023 to N252 billion in 2024. 

Nigerian operations 

Revenue went up from N1.2 trillion in 2023 to N2.1 trillion in 2024

Profit after tax was up nearly 100% from N490 billion in 2023 to N1 trillion in 2024

A chunk of that profit is due to higher finance income, if you strip the finance income (current figures i would say are abnormal due to high inflation), then Nigerian ops made barely N200 billion

Volume growth was weak 

The key number in analyzing a cement firm is how many tonnes were sold. 

Sales volume growth for Nigerian operations went up by 7.8% you. From 16.3 million tonnes in 2023 to 17.6 million tonnes in 2024.

Sales volume for other operations declined by 7.9%. From 10.8 million tonnes in 2023 to 10 million tonnes in 2024. 

There was the same trend in production volumes

Nigerian volumes grew

Rest of Africa volumes fell

In the earnings release, the firm attributed the decline to adverse weather conditions in Tanzania, in addition to election uncertainties in Senegal and South Africa.

Cost Pressures 

There was a sharp increase in cost of production and finance costs. Production costs for the group went up by 64% from N1 trillion in 2023 to N1.6 trillion in 2024.

Nigerian production costs were up 59% year on year. From N623 billion in 2023 to N988 billion in 2024. 

MD’s remuneration

MD’s remuneration went up by160 % from N609 million in 2023 to N1.5 billion in 2024. Up 159% year on year. 

Dividend payment was flat 

The company has proposed a N30 dividend. Same as last year. The company earned N29.74 per share in FY 2024. So it is dipping into some of its reserves to balance the rest. 

Buy/Sell/Hold ? 

In the last 5 years, revenue has grown at a CAGR of  36.4% and earnings at a CAGR of 16.5%.

CAGR means cumulative average growth rate. 

At its current share price of N480, and earnings per share of N29.74, that means it is trading at 16.1 times earnings. One can argue the stock is fairly valued. 

I should have more clarity from the earnings call later in the week 

Investors are unimpressed

The stock is currently trading down 6.35%, indicating investors may be unimpressed with the flat dividend.