Amid Price Reduction Controversy, Dangote, BUA, Lafarge Report N970bn Cost of Sales in 9 Months

• Nigerian cement manufacturers recorded a substantial improvement in cost of sales for the first nine months of 2023
• The increased profit is coming on the back of the increasing cost of production, forex crisis and inflation in Nigeria
• Dangote Cement remains the most profitable cement company, and its gains led the profit table

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

Nigeria's leading cement manufacturers, including Dangote Cement Plc, Lafarge Africa Plc, and BUA Cement Plc, recorded a substantial cost of sales of N970.2 billion during the first nine months of 2023.

This is according to data collected from their respective financial reports published by the Nigerian Exchange Limited.

The amount realised marks a significant rise of 27.4% compared to the N761.74 billion reported during the same period in 2022.

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The appreciation in sales value is in light of the soaring inflation rate in Nigeria and the devaluation of the naira in the foreign exchange market.

Dangote leads others in cost of production, PBT

Notwithstanding the obstacles, the trio of cement manufacturers achieved a pre-tax profit of N551.79 billion during the first nine months of 2023.

This marked a notable increase of 15.3% from the N478.66 billion reported in the same period of 2022.

Furthermore, an examination of the unaudited financial results and accounts for the third quarter ending on September 30, 2023, revealed that Dangote Cement reported a cost of production amounting to N642.74 billion during the first nine months of 2023.

This reflected a substantial growth of 33% compared to the N483.83 billion recorded in the corresponding period of 2022.

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Dangote Cement's profit before tax (PBT) for the nine months of 2023 was impacted by factors including net exchange losses on foreign-denominated transactions, increased production cost of sales, rising finance costs, and higher selling and distribution expenses.

These four factors combined to reach N1.16 trillion, up from N873.67 billion in the nine months of 2022.

Dangote Cement, Nigeria's most valuable company, reported a profit before tax of N404.89 billion during the first nine months of 2023, marking a 21% increase from the N335.9 billion reported in the same period in 2022.

BUA makes substantial increase amid cement price slash

In the nine months of 2023, BUA Cement disclosed a cost of production amounting to N186.44 billion, representing a significant increase of 31% compared to the N142.83 billion reported in the same period of 2022.

Many Nigerians commended BUA Group for taking a significant step in crashing the price of its cement from N5,500 to an ex-factory price of N3,500 per bag.

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BUA Cement reported a profit before tax of N85.75 billion for the nine months ending on September 30, 2023.

This marked a modest decline of 3.4% from the N88.81 billion reported in the nine months of 2022.

The decrease in PBT can be attributed to a net exchange loss of N26.9 billion in the nine months of 2023, compared to N5.26 billion in the same period of 2022.

Lafarge Africa, on the other hand, saw its cost of sales rise from N135.08 billion in the nine months of 2022 to N141.02 billion in the same period of 2023.

Dangote, BUA Cement spend N205bn powering generators in first 6 months of 2023

In related news, Legit.ng reported that Dangote Cement and BUA Cement incurred expenses of approximately N204.925 billion to fuel their generators for operational purposes in the first half of 2023.

This expenditure marked an 18% uptick from the N173.537 billion reported for the same period in 2022.

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This amount further accounts for a significant portion, specifically 41.15%, of the overall cost of sales, totalling N498.031 trillion during the review period for these companies.

It is important to note that cement and various other manufacturers in Nigeria heavily rely on self-generated power due to the inadequate supply from the national grid.

Source: Legit.ng