Dangote, BUA Cement Spend N205 Billion Powering Generators in First 6 Months of 2023
- Two cement manufacturers in Nigeria, Dangote and BUA Cement, said they spent N205 billion on power in the first half of 2023
- The companies revealed that they generate most of their power as they don’t get adequate supply from the national grid
- They also recorded varying amounts of profit in the first six months of 2023
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Two of Nigeria’s biggest Cement manufacturers, Dangote Cement and BUA Cement, said they spent about N204.925 billion powering their generators for operations during the half year ended June 30, 2023.
The spending represents an 18% increase from N173.537 billion recorded during the same period in 2022.
Source: Getty Images
Cement makers say power generation impacted their operations
The amount also represents 41.15% of the total cost of sales for the firms amounting to N498.031 trillion recorded during the review period.
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The information is contained in the audited half-year results of the companies.
Some costs resulted from fuel subsidy removal, exchange rate harmonization, and naira depreciation. In vairance, macroeconomic inflationary pressure, impacted the rest, especially in the local market, where headline inflation rose significantly.
Cement and other manufacturers in Nigeria primarily generate their power due to inadequate power supply from the national grid.
The firms were also heavily impacted by inflationary pressures, which currently stand at 22.41%.
According to available data, the profit after tax of the firms stood at N242.219 billion from N233.467 billion in 2022, representing a 3,75% increase.
Nairametrics reports that the cost of sales impacted the profits and was driven majorly by an increase in raw materials and energy prices.
Cost of sales overshadowed much of the companies’ earnings as inflation hit hard and the exchange rate became volatile.
Their cost of sales stood at N498.031 trillion for the half year 2023 as against N419,964 billion in 2021, which accounted for a 41.15% increase.
Dangote and BUA cement record profits, but mostly eroded by inflation
Analysis shows that Dangote Cement spent N157.020 billion on fuel in the first six months of 2023 compared to the N129.957 billion it spent in 2022, a growth of 20.82%.
The firms profit after tax rose marginally by 3.77% to N178.603 billion for the first six months in 2023 compared to N172.104 billion recorded in 2022.
Its cost of sales grew by 18.80% to N383.088 billion from N322.461 billion.
BUA Cement spent N47.907 billion on fuel in the first six months of 2023. The cement maker's profit after tax was N63.616 billion in 2023 compared to N61.363 billion in 2022, a 3.67% increase, while sales cost stood at 114.943 billion in the half-year of 2023, from N97.503 billion in 2022, 17.88%.
Dangote Cement claims top spot, MTN follows in list 10 most valuable companies in Nigeria
Legit.ng reported that Dangote Cement has emerged as the most valuable company in Nigeria by Market capitalisation as at the end of July 2023.
According to data from the Nigerian exchange, Dangote cement overtook telecom giant MTN, which occupied the top spot in the previous month.
Investopedia defines Market capitalisation as how much a company is worth as determined by the stock market.
Source: Legit.ng
