Profit at Dangote Cement, controlled by Africa’s richest person, jumped the most in about six years to a record helped by a stable naira and higher prices of the construction material.
Net income at the firm controlled by billionaire Aliko Dangote – who retired as chairman of the company on Friday – more than tripled to 309 billion naira (R3.9 billion) in the three months through to June from 76.6 billion naira a year ago, according to a company statement.
Revenue at the firm, which has operations in at least 10 African markets, increased 14% even though volumes fell 1.4% in the quarter.
Nigeria’s currency, prone to extreme volatility, has hovered around 1 550 to the dollar this year helping provide stability to businesses. Smaller rival Bua Cement, controlled by billionaire Abdul Rabiu, on Friday said that profit rose five-fold to 180.9 billion naira. Sales at cement makers may rise further buoyed by spending on infrastructure projects.
While inflation and foreign-exchange “volatility remain downside risks, the combination of strong domestic demand, enhanced production capacity, and improved cost structures positions these cement giants for robust year-end performance,” Matilda Adefalujo, an analyst at Meristem Securities in Lagos said in response to questions. “We anticipate sustained double-digit growth in both revenue and profit.”
Cement makers in Nigeria are benefiting from demand as the government builds the 700 kilometers Lagos-Calabar coastal highway and rural roads. Real estate projects are also surging, with the sector now accounting for a third of the nation’s gross domestic product.
Dangote Cement recorded zero foreign-exchange losses in the six months to June compared with 201 billion naira loss in the same period last year.
The cement maker has been the bedrock of Dangote’s business empire and wealth until he established his new 650 000 barrels-a-day refinery.
Dangote’s wealth valued at $28.5 billion (R511bn) makes him the continent’s richest man, according to the Bloomberg Billionaires Index. Rabiu’s assets are valued at $4.6bn.
BLOOMBERG
