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Amid tough business environment, Dangote Cement net sales rises to 36.6%



Nigeria’s cement companies are going through a rough patch despite rising market product prices. Rising input and logistics costs and falling exchange rates have made cement-making difficult.

A senior executive of one of the big three product manufacturers who requested anonymity said, “We understand the social sensitivity of cement, but to ensure sustainability, we must align pricing with costs.

“We must find that balance between customer affordability and production sustainability.

“In the last two years, margins have fallen steadily despite price increases; the margin squeeze comes from costs rising faster than revenues.” But he laments, “We still come off as villains whether margins go up or down.”

Nevertheless, for good or bad, the Nigerian economy is adapting to a series of policy adjustments implemented by the new administration in 2023. The decision to adopt a floating exchange rate for the naira and remove petrol subsidies has led to currency depreciation, raising business operational expenses. As a result, inflationary pressures have intensified, affecting consumer prices and market demand.

In 2023, Dangote Cement was exposed to currency fluctuations across African economies, with Nigeria being the most affected.

The Nigerian Naira experienced a significant depreciation of 51.6 percent against the US Dollar, while the Zimbabwe Kwacha similarly depreciated by 29.7 percent against the Dollar. However, amidst these depreciations, the FCFA (XAF) stood out with a modest appreciation of +3.5 percent .

These currency movements introduced high exchange rate volatility, affecting the cost of imports, creating disruptions in trade balances, and contributing to higher levels of economic uncertainty and inflation.

Dangote cement’s total sales and administrative expenses rose by 31.1 percent to N491.6bn in FY 2023, driven by the 27.6 percent increase in haulage expenses due to the significant rise in coat of AGO, coal and other materials.

The total production cost of sales also increased by 51.8 percent to N1.006trn in 2023 from N662.9bn in FY 2022, owing to an increase in fuel and power consumed, which increased by 49.80 percent to N399.2bn; depreciation and amortisation increased by 34.99 percent , and other production cost increased by 126.77 percent .

Group earnings before interest, tax, depreciation, and amortisation (EBITDA) for the year increased by 25.1 percent to N886.1bn at a margin of 40.1 percent from N708.2bn in 2022. Pan-African EBITDA grew four times larger to N263.7bn in FY 2023, at a record margin of 28.5 percent from N64.9bn in 2022; this growth was supported by solid volume growth and a reduction in cash cost in some countries of operation.

Dangote Cement’s revenue from its Pan-African operations grew in 2023, more than doubling its 2022 figures. The growth rate rose by +123.2 percent, to N925.93bn from N414.83bn in 2022.

The increase was driven by volume growth in Senegal, Congo, and Zambia. Sales volume across the four Pan-African operations grew substantially, climbing by +12.7 percent to 11.25Mt in FY 2023 from 9.98Mt in FY 2022.

The Nigeria operation experienced a slight growth of +7.7 percent to N1.297trn on price increases, while the sales volume from the Nigeria operation, which is cement and clickers, stood at 16.4Mt in 2023, down by -8.1 percent from 17.8Mt in 2022

Despite facing various expenses such as production, administrative, and selling/distribution expenses, the company increased its profit before tax (PBT) to N553.10bn in FY 2023 from N524.002bn in FY 2022, reflecting a growth of 5.55 percent . The cement company managed its income tax expenses, resulting in an increase of 19.17 percent in profit after tax (PAT) from N455.58bn to N382.311bn.

Due to higher non-taxed exchange gain in the period, the effective tax rate increased to 17.6 percent in FY 2023 from 27.0 percent in FY 2022. Moreover, gains from the net monetary position and contributions from a share of profit from associates also contributed positively to the bottom line.

Dangote Cement’s financial position improved from FY 2022 to FY 2023, with its total assets increasing by +50.58 percent from N2.62trn in FY 2022 to N3.94trn in FY 2023.

This was driven by growth in the group’s liquidity position, such as a +57.52 percent growth in cash and cash equivalents, +117.91 percent growth in right-of-use assets, and a +60.95 percent rise in trade and other receivables.

On the other hand, liabilities arising from financing activities have increased by 23.81 percent  to N521.3bn due to the 707.80 percent increase in (three-to-twelve-month loan repayment). Moreover, the group’s retained earnings increased in FY 2023, rising to N1.09trn as the net income of N455.58bn exceeds the dividend payout of N338bn.

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SIFAX Shipping partners ECU Worldwide to boost LCL export



By Seun Ibiyemi

SIFAX Shipping Company Limited, a subsidiary of SIFAX Group, has sealed a partnership deal with ECU Worldwide, the world’s number one LCL player, to boost export activities from Nigeria.

Less-than-Container Load (LCL) is one of two main types of containerised transportation services.

The other is Full-Container Load (FCL). LCL is optimal when an entire container isn’t filled up. LCL allows the transportation of small cargo volumes without paying for the whole container.

The partnership will help business owners and exporters whose consignments are less than container load to access the international market.

According to MD, SIFAX Logistics Company Limited,  Paul Linden, this service was offered in response to inquiries from various customers who are desirous of exporting their products but do not have the required huge volume.

He said, “We know that many SMEs and business owners are desirous of accessing the international market, but are hampered by their lack of large volume.

“This service is designed particularly to address this concern. It will boost Nigeria’s export and be a game changer for our small and medium-scale businesses. We have put all facilities in place to ensure the business runs smoothly in partnership with ECU Worldwide.”

AGM, SIFAX Shipping, Adekunle Owobamirin, noted that all arrangements have been perfected to make the service a success.

“Our partners from ECU have inspected our warehouse and we have already assigned dedicated staff who would work on this service.

“ECU Worldwide and SIFAX Shipping is the first consolidator partnership to offer dedicated LCL export services from Nigeria to the world. Our partners have established 2,400 direct trade lines with a presence in over 180 countries.

“This will allow all our customers to export their goods anywhere in the world,” Adekunle said.

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RIFAN applauds NAICOM,  IGP over compulsory insurance enforcement



The Retail Insured Family Association of Nigeria (RIFAN), the country’s largest community of insurance consumers, has praised the Commissioner for Insurance, Olusegun Omosehin, and the Inspector General of Police, Kayode Egbetokun, for their recent efforts to enforce mandatory third-party insurance.

RIFAN’s major aim is to restore public confidence in insurance policies.

This commendation follows a meeting on June 11, 2024, where Omosehin visited Egbetokun at Louis Edet House, Force Headquarters in Abuja to discuss the enforcement of compulsory third-party insurance.

Omosehin highlighted the illegality of driving without valid motor insurance and announced that the benefits attached to third-party insurance have increased to N3 million.

Responding to Omosehin’s request, Egbetokun committed to deploying the Deputy Inspector General of Operations to ensure the enforcement of this mandate.

RIFAN’s Director General, Ali Theophilus, expressed support for this initiative and indicated RIFAN’s readiness to collaborate on enforcement and public awareness.

He emphasised that proper enforcement could significantly boost premium income for the insurance industry, facilitating easier claims payments and enhancing public confidence in insurance.

He said getting the enforcement done is also in line with the Road Traffic Act for any vehicle plying Nigerian roads to have 3rd party motor insurance.

Theophilus commended the Inspector General of Police (IGP) for his proactive steps towards enforcing third-party motor insurance and urged him to extend this message of hope to all police officers and relevant law enforcement agents.

He emphasised that third-party insurance benefits every vehicle user, including law enforcement personnel, regardless of their career or social status.

He pointed out that many law enforcement officers neglect this insurance under the guise of “Esprit de Corps,” which does not cover damages in the event of an accident. This negligence costs the insurance industry over N15 billion annually, which could otherwise be added to premiums to facilitate claim payments.

Theophilus reiterated the importance of third-party insurance, explaining that while it does not cover personal vehicle damage directly, it covers damages caused to other vehicles due to negligence. This coverage can help settle such claims, benefiting all parties involved.

Furthermore, Theophilus urged the IGP to enforce licensing for insurance agents through an initiative he called “Operation Show Your Licence.” This would reduce the prevalence of fake agents and help NAICOM reach its goal of increasing licensed insurance agents to three million by the end of the year.

He called on the Nigeria Police Force and all law enforcement agents to join RIFAN to unite in restoring public confidence in the insurance industry. He stated RIFAN membership benefits, including easy access to claims payments, unique insurance covers, and professional advice etc.

Theophilus also announced plans to collaborate with underwriters to create a funeral insurance policy as an additional membership benefit, particularly in Southern Nigeria, where funeral expenses are significant. RIFAN plans to hold town hall meetings to educate grassroots communities about the importance of insurance.

Theophilus called on the IGP, law enforcement agencies, the Commissioner for Insurance, the Director General of NIA, and underwriters to register with RIFAN to help build the insurance industry of Nigeria’s dreams and restore public confidence in insurance.

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Afreximbank, First Bank sign $200m facility agreement to finance clients’ needs



Afreximbank and First Bank of Nigeria(FBN) have signed a 200 million dollar facility agreement for financing the needs of FBN’s numerous clients.

The signing took place at the ongoing 31st Afreximbank Annual Meetings (AAM2024) in Nassau, The Bahamas, on Friday.

The facility will finance the needs of FBN’s numerous clients engaged in oil and gas and energy, manufacturing, telecommunications and associated infrastructure projects.

The parties who signed the agreement included Olusegun Alebiosu, Acting CEO, FBN, Awani Kanayo, Executive Vice- President, Intra-African Trade Bank (IATB), Afreximbank, and Viswanathan Shankar, CEO, Gateway Partners on behalf of African Credit Opportunity Fund.

The 31 AAM2024 is being held in Nassau, The Bahamas from June 12 to June 15, with the theme: “Owning our Destiny: Economic Prosperity on the Platform of Global Africa’’.

The AAM is taking place alongside the 3rd edition of the AfriCaribbean Trade and Investment Forum (ACTIF2024).

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